Microsoft banks on relaunchto boost Zune

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The Independent Online

At Apple's flagship store on Manhattan's Fifth Avenue yesterday, worshippers at this temple for the digital age were lining up to play with the new range of touch-screen iPods unveiled last month. At an electronics chain store round the corner, Microsoft's rival product, the Zune, was relegated to a small display case in the corner. No one was looking at them.

The failure of the one-year-old Zune to capture either the public imagination or any significant market share has been an embarrassment for Microsoft, and it has now launched a second generation of the product in the hopes of making some progress in the run-up to Christmas.

But industry analysts immediately gave a thumbs down to the reshuffled Zune range, and predicted Apple would maintain its dominance of the market for digital music players, where the iPod accounts for more than 70 out of every 100 devices sold. The Zune accounts for three in 100.

At a low-key unveiling in Microsoft's native Seattle, Bill Gates argued that his company had come from behind in many of the software and hardware markets where it is now a major force. "We think the same kind of thing in terms of persistence and innovation can apply in this area," he said.

The new Zune range corrects many of the problems encountered with the first generation, including poor software that made the player too slow. There will be fewer restrictions on wireless sharing of songs – a facility that differentiates the Zune from the iPod – and the trademark brown colour has been dropped in favour of a range of brighter ideas.

"The market has already punished Microsoft pretty directly, since the Zune is very far from being a success," said Van Baker, analyst at the market research firm Gartner. "The old adage applies: never buy product from Microsoft until version 3."

The relaunch of the Zune comes as telecoms players are sharpening up their offerings, and as Verizon Wireless, the US cellphone company part-owned by Vodafone, began promoting a touch-screen phone with music storage capabilities.

Mr Baker was among the analysts sceptical the Zune will be the product to dent Apple's position, but he did predict that future incarnations might take market share from iPod's rivals, such as those made by SanDisk and Creative Technology.

"Apple have an extraordinary line in MP3 players, ranging from $100 (£50) to almost $500," said Mr Baker. "There are not many gaps for anyone to shoot at."