Zune revenue down $100 million

By Justin Mann on January 23, 2009, 5:35 PM
After confirming job cuts and announcing profit dips, it's no surprise that Microsoft feels they are hurting financially. The companyís Entertainment and Devices Division is still making a profit, though, so at least some of their ventures must be doing well. Apparently thatís not the case with the Zune platform, which saw revenue drop $100 million, or 54 percent compared to the same quarter last year due to lackluster sales.

That's a significant drop, cutting Zune revenue nearly in half. A lowered demand for media players is an easy culprit to point a finger at, but Microsoft's biggest competitor, Apple, suffered no such loss. Instead, Apple has actually managed to grow iPod sales as much as three percent. Clearly, the Zune is not performing as well as Microsoft wants. They're vested in the mp3 market too far at this point to back out, so what will Microsoft's plan be to repair Zune sales?

User Comments: 5

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SkateNY said:
I donít doubt that many or even most Zune owners are satisfied with what they have. Hereís my thing: Apple dove into the MP3 market when that market was already well on its way to maturity. The iPod quickly made a big splash, and iTunes has played no small part in helping the iPod acuire a 70% market share. Apple did not engage in illegal, monopolistic business practices in order to achieve that level of prominence; nor did Steve Jobs hypnotize buyers, steering them towards the iPhone.When the iPhone was released in October of 2001, it succeeded during a recession caused by the terrorist attacks of 9/11. If the current economic climate adversely affected the Zune and other consumer products, then it stands to reason that it also adversely affected iPod sales. Yet, Apple reported a growth in iPod sales for the most recent quarter, versus a 54% drop in Zune revenues. How much better would the iPod have faired this quarter without the deepening recession?I believe that Microsoft and its investors need to re-evaluate the Zune with regard to how it affects other products, and how it affects shareholder interests. If Iím a Microsoft competitor ó and I donít believe that Apple and Microsoft compete in the sense that they appeal to very different groups of customers ó then I truly hope that Microsoft continues to throw money and other resources at the Zune.
MichaelLS said:
Well said! Add to that the very poor research that went into naming the Zune. The very poor marketing efforts to promoted the little 'brown' box. The huge product return rates and huge failures made in the market place. The Zune was a terrible disaster for the giant Micro$oft. Not good! No wonder they are now in serious trouble financially!Surely, after all these years of watching Micro$oft copy every move that little Apple made, you would have thought, surely by now, they could have done a much better job with the portable music player market place. Sad!So, now they're trying to copy Apple's Garage Band instead. Why?It's starting to look pretty bad for Micro$oft.What happened to the companies management?
dustin_ds3000 said:
[b]Originally posted by SkateNY:[/b][quote]When the iPhone was released in October of 2001[/quote]Apple announced the iPhone on January 9, 2007.small typo??
[b]Originally posted by dustin_ds3000:[/b][quote][b]Originally posted by SkateNY:[/b][quote]When the iPhone was released in October of 2001[/quote]Apple announced the iPhone on January 9, 2007.small typo?? [/quote]hahaha I stopped reading that comment when I came across that sentence...
fullmetalvegan said:
lol - the rest of the paragraph is redundant after you correct that typo.
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