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Zune Sales Go Hard Into Reverse

Posted by: Peter Burrows on January 23

Engadget spotted this telling bit of news about Microsoft’s Zune business: revenue fell by $100 million, or 54%, in the fourth quarter from the previous year. This was despite a big advertising campaign November, and, by most accounts, an improved product. And a tweak to the ZunePass music service that lets subscribers download ten free songs a month.

This doesn’t mean Microsoft will kill the brand. While All About Microsoft is reporting that the Zune group will suffer more than its share of the layoffs Microsoft announced yesterday, Microsoft still feels the brand is critical to reaching entertainment-focused younger customers. And if Microsoft can swallow losing nearly $500 million on a Net business that brought in just $866 million last quarter, it can certainly stomach any Zune-related losses…or embarassment.

Rather, look for Microsoft to try to reposition Zune as less about hardware and more about a music platform. For example, some version of Zune will be available on Windows Mobile phones, said Steve Ballmer himself.


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Reader Comments

Steve Jobs

January 23, 2009 05:54 PM

Zune sucks. Design, and everything about it is lame. Too many ppl. have apple these days and noone just wants to switch to something that isnt as good and even lamer, so I dont see any reason why would anyone would choose zune over apple. To take over the market share one cant just much something, they need to come up with a better product in order for custumers to choose them instead of somebody else. Apple stores have great custumer survise and I just dont see a Zune product care store.

Alfiejr

January 23, 2009 10:07 PM

a 50% drop in sales during Christmas is a death sentence. the Zune is dead man walking. heads will roll. even worse, the very name "Zune" - always a bit odd - will now become a target of ridicule like the Edsel back in the day. so its future as the brand for the MS on-line music store is kaput too. adios!

Opey Inion

January 24, 2009 12:31 AM

The same goes for Windows. Windows is now just an application that you can run on a Mac. People that own Macs end up saying that they love their Mac. How many people say they love Windows?

ppgreat

January 24, 2009 05:38 PM

What's a Zune?

Constable Odo

January 24, 2009 06:59 PM

I heard nary a word before Microsoft earnings that Zune sales had tanked and revenue was down and that they should dump Microsoft shares as soon as possible. I didn't hear much ahead of time about how netbook sales were really hobbling XP and Vista sales.

Unlike Apple, which weeks before, the news media was yelling that investors should dump Apple shares because they THOUGHT that iPod sales were going to be terrible and nothing could save Apple as long as they were selling over-priced products. Claiming that nobody was going to buy new iPods for Christmas because the iPod market was already saturated. This is surely biased news reporting.

Anyway, Microsoft should scrap the Zune and focus on developing some WinMo 7 iPhone killer hardware. They probably won't stand a ghost of a chance, but at least they can start out with a new name that has no connection to the Zune.

So Goes Microsoft

January 26, 2009 01:57 AM

Hello - Zune is not the problem - It's a guy by the name of Steve Anthony Ballmer who can't get out of his own way. What made Microsoft great light years ago, will also be what finally brings the end to this once great company. Talk about out to lunch!

Reminds me of one the richest and supposedly best managed airlines in the world (Pan Am) that had nothing but the "know-it-all" old guard in charge when they woke up one day and found themselves out of business. History has a very strange way of repeating itself. All roads at Microsoft start with Ballmer and few of them lead anywhere that makes any long term sense.

Before Ballmer knows it, Microsoft will wake up one day and ask the famous Pan Am question, "What happened?"

tecben

January 26, 2009 09:18 AM

The Zune line is only competing with the iPod Classic. They do have something to offer with features that could make it a great product. When they decide to stop making third rate products/software they really shine. Till then I love my iPod and have no plans to make the switch.

johnj

January 26, 2009 10:13 AM

Zune is a very good device, but Microsoft has done a poor job of advertising/marketing it.

In contrast, Apple are masters at marketing pseudocool to wannabes. Apple Fanboys would buy a dog turd if it had an Apple logo on it. (grin)

loser

January 26, 2009 12:06 PM

this product sucks

Fred

January 26, 2009 12:09 PM

Everyone that has a Zune loves them. When looked at objectively, the Zune is a great product.

BMWTwisty

January 26, 2009 12:35 PM

The Zune is to an iPod as a Yugo is to a BMW. Ballmer wants to put new paint on the Yugo but it'll remain a nowhere piece of crap no one will buy.

mjw149

January 26, 2009 01:55 PM

Zune might be nice for some people, but its features have always been behind. First, no flash memory, then videos and podcasts were lacking, and now they don't have touch. The hardware is clever, but if MS can't compete on software and content, what are they doing in the game? And putting this on WinMo? Who will open their WinMo phone and think, oh, zune, that must be the music player? Which mobile carrier will invite the opportunity to support exotic WinMo-exclusive software that no one wants that competes with their own software? The shareholders should be furious, because this is the backdoor that AAPL is using to steal your profits. This new strategy has done nothing but alienate partners. While Ballmer fiddles, MS burns.

maxbianco

May 18, 2009 03:20 AM

welcome to heaven here is your ipod
welcome to h3ll, here is your zune
by the way...
whats a zune????
see ya real zune at the apple store!!

hahahahaha

tim in denver

August 9, 2009 03:00 AM

Microsoft makes really bad products.

They basically bought their operating system from Xerox in the eighties and lameley "made it over"/plagarized the Mac operating system. It worked and they have a monopoly which allows them to continue their lame products where they do not need to improve or better their product line for their customers.

I'm a Mac user who will never return to Windows. As for the Zune... would I ever consider buying one? Only for nostaligia sake off of ebay as long as the total cost was under $10.

Microsoft = JUNK

lj

September 7, 2009 10:50 PM

zune sucks , i have nothing but problems with mine , the software is buggy , i should of thrown my money out the window

GW

September 19, 2009 04:02 PM

The Zune does suck. I had mine about a year no problems. All of a sudden the most important part, the "Zune Pad" stopped working. Tried all of there supposed fixes to no avail. To top it off they want $70.00 to fix it. I only paid $150 new. Now I have all this music I bought and can't do anything with it. This is the worst piece of K-RAP. I am now cosidering an iPod.

GW

September 19, 2009 04:02 PM

The Zune does suck. I had mine about a year no problems. All of a sudden the most important part, the "Zune Pad" stopped working. Tried all of there supposed fixes to no avail. To top it off they want $70.00 to fix it. I only paid $150 new. Now I have all this music I bought and can't do anything with it. This is the worst piece of K-RAP. I am now cosidering an iPod.

CK

October 14, 2009 02:42 AM

I find it hilarious that you Apple fan boys are still in denial about the PC dominating the computer market. Make no mistake, whatever your opinion of the two platforms may be, PC makes up the vast majority of sales and software. Enjoy your smug little island, pussies. Apple sales are driven by iPhones/iPods, and no one with a fucking IQ above 80 would buy a Mac. Steve Jobs is a soulless cocksucker who doesn't give a damn about supporting his devices, he wants rich idiots who'll buy anything he puts in front of them. If you can afford it and you're comfortable with that, great. If not, shut the fuck up and take it, bitches.

john

October 27, 2009 10:26 PM

Stay away from Zune. They only allow you to use their Zune players which are total crap. I have had two that both had the same problem. The backlights stop working after a few weeks. This means that the player still works and holds music but you cannot read the display. Plus the site is always frozen or otherwise not usable for some reason. It is a really good idea and if it had been properly executed with high quality players and a user friendly site it could have been very successful. Instead they went the cheap route and the whole thing is a disaster.

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A blog on the daily doings of Apple and the many companies in its orbit, with insight and analysis by two longtime Apple-watchers BusinessWeek Senior Writer Peter Burrows and BusinessWeek.com Senior Technology Writer Arik Hesseldahl.

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