Analysts tell Microsoft how to improve Zune's chances of success

Though Microsoft will put on a corporate spin, more independent analysis of their new music player, the Zune, shows that it has captured only a small section of the portable music player market, and has failed to take any of the iPod’s market share.

Ross Rubin, director of the NPD Group, suggests that the Zune captured about one-tenth of the market for hard drive-based music players in December, slipping to under 10% in January, and 8.7% in February. However, drive-based players now account for only about a quarter of the total market, making Microsoft’s overall market share around 2.5%.

Where the Zune has taken market share is from smaller manufacturers such as Creative Labs.

The analysts’ top five tips for pushing the Zune towards success are:

1. Forget the social: forget about music sharing via Wi-Fi because there’s not enough of a user base to accomplish it, and sharing happens organically if something is cool, not because the marketing guy says so (for example YouTube)

2. Look back and look forward: not only do Microsoft need to explain the Zune to households who don’t have any type of portable music player (apparently it’s not yet a ubiquitous concept), but they need to power ahead with new features, because if they don’t they’ll be overtaken, not only by Apple but by other manufacturers.

3. Go flash: Invest in flash-based players, as that’s what dominates the market now.

4. Push subscriptions: A key differentiator from Apple could be the subscription-based Zune marketplace. Though it’s music to rent instead of to own, marketed well it could become a key selling point.

5. Make it sexy, make it work: Microsoft needs to make more sexy, good looking, and feature-laden Zune’s if they’re to compete with the iPod and other devices. It also has to work well.

Chasing Apple isn’t an impossible dream for Microsoft, but it seems they have to do a lot more if they’re even to start competing.