Microsoft’s Zune fiasco faces steep sales declines; analyst says pull the plug

Apple Online Store“Microsoft Corp.’s quarterly earnings report last week featured a number of grim statistics, including a relatively overlooked, albeit steep decline related to its Zune portable media player — potentially adding more uncertainty to the embattled product’s future,” John Letzing reports for MarketWatch.

MacDailyNews Take: Zune has no future. It never did.

Letzing continues, “Designed to rival Apple Inc.’s iPod, Microsoft’s Zune first appeared in late 2006, but has struggled to chip away at the iPod’s dominance… ‘If Zune were going to make a strong move against the iPod, it already would have,’ said IDC analyst Susan Kevorkian.”

MacDailyNews Take: Which reminds us, in the case of the Zune: “Paging Dr. Kevorkian… paging Dr. Kevorkian…”

Letzing continues, “Revenue for the non-gaming side of Microsoft’s Entertainment and Devices unit, which includes the Zune, tumbled 42% to roughly $211 million for the fourth fiscal quarter ended in June… ‘The market reception for Zune is so disappointing that many retailers have even stopped selling it altogether… Microsoft should abandon Zune and follow Apple’s strategy to try to make its presence felt in the high-growth smartphone sector,’ said George Kurian, a vice president at Tradition Capital Management LLC, which owns Microsoft shares.

MacDailyNews Take: General rule of thumb: When your product’s name has become the latest slang for fecal matter, it’s probably doing your company more harm than good.

Letzing continues, “”The easiest way for Microsoft to do that, Kurian said, would be to simply purchase Palm Inc. Palm’s Pre smartphone, released in June, has been touted as a viable rival to the iPhone. Tradition Capital Management does not own any Apple or Palm shares.”

“The last mention made in company filings of the Zune’s performance had come in a fiscal second-quarter report, where Microsoft said revenue at its Entertainment and Devices division was undercut by a 54%, or $100 million decline in Zune platform sales,” Letzing reports. “NPD Group analyst Ross Rubin said in the first half of this year, Zune’s share was 2%, compared to about 70% for the iPod.”

Full article here.

MacDailyNews Take: The lack of a monopoly built on ideas appropriated from Apple equals yet another abject failure for derivative Microsoft.

It’s doing well. We knew what we wanted… We wanted to have a reputation of doing something innovative… We feel great about Zune.Bill Gates, January 23, 2007

In a word, no.Steve Jobs, October 15, 2006, when asked by Newsweek’s Steven Levy if Microsoft’s Zune had him worried.

Any product that is essentially a copy of something else… there’s something inherently less interesting about them. Because the companies that make them don’t lead, they follow. – Paul Thurrott, March 19, 2009

54 Comments

  1. BC Kelly:

    That is incredibly hilarious, as well as totally true (just checked)! The fat guy with a tattoo in those pictures is that moron who tattooed Zune logo on his forearm. If I remember well, he was also planning to legally change his name to Microsoft Zune…

  2. Not to stir the water but I have a “friend” who has owned 2 ipods and 1 zune. The ipods’ hard drives went bust. One was an original ipod that lasted not quite 2 yrs., the 2nd ipod lasted slightly over 2 yrs. He got the zune as a gift at about the same time he got the 2nd ipod. The zune (are u ready) is still going strong with no problems.

  3. “Microsoft should abandon Zune and follow Apple’s strategy to try to make its presence felt in the high-growth smartphone sector”

    More hilarity. Microsoft had a 9 year head start with a true smartphone and they couldn’t even keep up to a company that started out making pagers.

  4. Arnold Ziffel
    @From the front,

    Uh, huh.

    meh. Could be true. Depends on how they are treated. But from friends and family, I have first hand knowledge of at least 20 iPods(from original Minis to Touches) , and the worst problem any of them has had was file transfer issues relating to a crappy motherboard.

  5. I hope Microsoft reconsiders and keeps the Zune going. I mean if they pull the plug on the Zune’s cradle (a place where the sun don’t shine), can you imagine the mess it is going to make in a few dozen bathrooms. Not to mention the stink.

    At least by keeping the Zune going you know that someday some obnoxious ectoplasmic moron is going to explode and spontaneously combust eventually. The heat helps to burn off most of the mess and smell I hear.

    Speaking of which, I see some dimwit is joining the crickets. Talk about cruelty to animals.

  6. There really is no “could be true” factor here. The ipods were treated great as was the zune. Good grief, for a number of reasons, sometimes, bad things occur with apple products thru no fault of the user. Except for his ipods, my friend tells me he has no reason to doubt that, overall, he believes that apple products have a better track record than other producers’ products in terms of quality or length of life. He’s been a Mac user since 1984 & still has his original macs, including a Mac SE, 12in PB. His compaq, his ibm’s are all gone to computer heaven/hell.

  7. Maybe Microstink should keep the Zune around. It’s a great inpirational tool for firing off jokes and what not! ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  8. As with many posters, I have never seen a Zune in the wild.

    I have seen some at Walmart though, hidden beneath layers of dust in locked display cases.

    May the Zuny M$ die a slow agonizing death …

  9. Don’t people realize that number of zune’s that have been sold are mostly micro$oft fan boys who can’t stand to own anything apple? including my bro who has been through 5 of them, all hardware failure. He came to his senses and bought an iPod Touch!

  10. I love this part:

    “Microsoft should abandon Zune and follow Apple’s strategy to try to make its presence felt in the high-growth smartphone sector,’ said George Kurian, a vice president at Tradition Capital Management LLC, which owns Microsoft shares.

    Translation: “Microsoft has had no luck copying Apple in this arena, so they should try copying Apple in another arena, said a Microsoft shareholder

    Yes, even Microsoft’s shareholders believe that Microsoft should just chase Apple at full speed until the entire company has a heart attack and dies. Microsoft: chock-full of stupid from the CEO to the shareholders.

    ——RM

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