Zune attempts to unseat the iPod

Two huge companies finally locked horns in the music player market in 2006 as Microsoft launched its long-awaited Zune player in November. 

However, the attack on Apple's domination of the music market with its massive iPod sales and successful iTunes download service faces an uphill struggle, according to industry experts. 

Ovum analyst Carl Gressum said that the lack of a worldwide release showed the battle Microsoft was facing to eat into Apple's lead. 

"This is not Microsoft's first attempt at the portable entertainment market; the soon-to-be-extinct PlayForSure springs to mind," he said. 

"Microsoft lacks a distribution partner for digital music in Europe, and has therefore not introduced the Zune in Europe for the time being. It is also not present in Asia."

Gressum said that the Zune also has other disadvantages, such as competing with the 3,000 accessories that are available for the iPod, and cutting deals with companies such as airlines and car manufacturers which are willing to integrate either iPods or iPod docking stations into their designs.

Barring the imminent launch of a wireless iPod, the Zune's big selling point is the ability to share music using a Wi-Fi connection. Unfortunately, Gressum said that even this had limitations.

"It only works for three days, or the music can be played three times, whichever occurs first. Microsoft will face an uphill battle against Apple and its wider range of products," he said.

Devices such as Sony's PlayStation Portable (PSP) might have been expected to make a dent in Apple's turnover of iPods, but Gressum maintained that the lack of internal storage had put users off. 

"The PSP lacks internal storage capabilities and instead relies on Universal Media Discs [UMD] and Memory Stick cards," he said.

"If Sony wants to position the PSP as a multimedia device, it needs to compete against the iPod on internal storage."

2006 saw UMD abandoned by many film companies and some retailers cut back the amount of space given to the format as sales failed to appear. 

Apple traditionally sells about eight million iPods each quarter, but Gressum said that this would naturally jump over the Christmas period.

"Apple has traditionally done very well over the holiday period, and Q4 shipments of iPods are expected to surpass 15 million," he said.

He believed that sales would continue to be strong despite a number of users saving their cash to wait for the rumoured full-screen video iPod and the iPhone.

"There are reasons to believe that consumers will delay their purchases of portable audio and video devices amid rumours of the impending releases of the iPhone and full-screen video iPod," said Gressum.