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Zune Sales Down 54 Percent: Will Microsoft Fight to Save Its Digital-Music Player?

1/27/09, 1:55 pm EST

The ongoing saga of the Zune has reached another sad chapter as Microsoft revealed that sales of their digital-music player were down 54 percent in the fourth quarter of 2008 compared to the same time period in 2007. According to an analysis on industry blog Coolfer, Zune revenues amounted to approximately $117 million in Q4, down $100 million from the ‘07 total. Meanwhile, over the same period, iPod sales were up. While Zune held on to four percent of the market share for portable digital-music players, iPod maintained a whopping 71 percent.

In recent weeks, Microsoft has been ready to kill off the Zune and “deeply committed” to the Zune. Confusing, no? Like most other companies during this recession, Microsoft has had their fair share of problems, including an 11 percent drop in second quarter earnings and the company’s first ever round of significant layoffs. So it seems likely that the company would want to unburden themselves of their dead weight, which given its 4th quarter numbers might be the Zune.

Another problem facing the Zune is the device’s reliance on an outdated $15-per-month subscription fee. Given the economic situation, plus the widespread nature of illegal downloading, consumers seem less willing to pay a monthly rate for the service. Yet fans of the Zune cite its wireless-sharing capabilities and interface as reasons to right for their player. Perhaps the crushing financial figures will be the wake-up call Microsoft needs to make adjustments and deliver an even stronger product, rather than simply hand the category over to Apple.

Related Stories:

Microsoft “Deeply Committed” To The Zune, Company Says
Is the Zune About To Become Extinct?
Microsoft Adds More Wi-Fi Options, Bigger Hard Drives For Zune


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Comments

douglaslive | 1/27/2009, 2:33 pm EST

What “outdated $15-per-month subscription fee?” I use my Zune day-in, day-out, and have never purchased anything from their store. It’s really an excellent player. I will say I have been tempted by the Zunepass, if only because it allows you to keep (forever!) 10 tunes a month. That makes it not “outdated,” but trail-blazing.

dan | 1/27/2009, 3:46 pm EST

enjoy…

George | 1/27/2009, 4:27 pm EST

Maybe now Microcrap can dump more money into the ‘Mojave Experiment.’ Ugh. Dump the Zune and maybe you can save some jobs. No pun intended.

George | 1/27/2009, 4:29 pm EST

So now subscription services are considered trail-blazing? 10 whole tunes a month for $15? Wow. Given Amazon’s daily mp3 deal, $15 can buy you 4 or 5 ALBUMS.

douglaslive | 1/27/2009, 9:25 pm EST

George — show me any other subscription model that allows you to download all you want and keep 10 songs a month. I buy from Amazon all the time and no way will $15 buy 4 or 5 albums. DA

SkateNY | 1/28/2009, 4:32 am EST

@douglaslive:

Did you not know, and how could you not know, that your vaunted subscription plan comes with DRM restrictions? Restrctions that, only recently, Apple convince the record companies to drop on the iPods and iPhones.

Yes. It’s time to shut down the store on the Zune, if only because Microsoft has demontrated an historical capacity to fail at such endeavors. Just look at their stock price of independent confirmation.

In recent history, Microsoft has made several attempts to re-invent itself as both a hardware company and a software company. And, regardless of what Microsoft apoligists write — seemingly everywhere on the Internet — not only has Microsoft not only thrived in this regard, they’ve produced abysmal failures that only deteriorate their plunging reputation further.

Windows Vista: A bomb from the beginning despite Microsoft bloggers who continue to strain to have us believe that this is the best thing since sliced bread. It isn’t. Even Microsoft’s CEO admitted that it was a failure. Thus, Windows 7 placed in the fast lane for release. Their Seinfeld ads, to the tune of at least 10 million dollars, carried the stench of desperation.

Xbox: Yeah. Most users love it. But there aren’t enough of them to make it profitable and, being long in the tooth, the light at the end of the tunnel burned out long ago.

Zune: This is the hardest part. Zune owners seem to love what they have. That having been said, there are very few people who own a Zune, and far less who want one. Get rid of it.

Microsoft needs to get back to its roots. It needs to start making an attractive and functional operating system. It needs to not have to fend off competition from people like Apple and Linux.

This is all a hard pill to swallow for Microsoft and their apostles, but sometimes you have to eat your vegetables.

Brian | 1/28/2009, 8:41 pm EST

Outdated? Are you serious? I suppose Netflix is an outdated movie rental model too? When iTunes or Amazon comes out with a service that lets me put every album I’ve ever wanted on my music player, maybe I’ll ditch my Zune. I don’t see how that concept so hard to understand.

kurt | 1/29/2009, 3:50 am EST

awwww, i like my zune

Larry Crockett | 1/29/2009, 10:39 am EST

I have never been much of a Microsoft fan (how could a company that wealthy produce such poor OS software?), but one reason I am an Apple fan is that I am not a fan of monopolies. The iPod (and increasingly iPhone) is nearly as much a monopoly as Windows once was. Keep the Zune alive so that Apple has some well-funded competition. We consumers can only benefit and Microsoft can afford it. The Japanese learned long ago that you should commit to a market for the long term to have success, and look at ‘em now.

RB | 1/31/2009, 5:09 pm EST

It’s a great model. I download albums on a daily basis. Podcasts, video and a excellent software interface make this thing hard to beat. Unless you own one, I think you have zero credibility to comment. It’s amazing to me that anyone would even care to comment on a product they don’t own. Hey, the Ipod/Touch are nice pieces of hardware. I simply don’t see how the ITunes format is cheaper. With Zune, if I don’t like the music, I can flush it off the player having spent just the monthly fee. And come on, DRM? Everyone knows there are many little apps that can get around that curveball, if you absolutely have some spiritual problem with it. I see no incentive to try, however. I also know that at least the artists who participate are getting a piece of the pie, versus the illegal download method.

rick | 1/31/2009, 9:59 pm EST

I have an Ipod and a Zune. The Ipod is good for running and I can plug in the headphones and pretend I can’t hear my boss, in her button down oxford shirts blazer, which is always fun. But the Zune is wireless, which can’t be beat.

Anonymous | 2/4/2009, 1:20 pm EST

Outdated? Are you kidding me? I suppose the itunes model of paying $1 / song (or the *gasp* variable pricing) is an innovative and progressive model. The only innovation in this space is being done by the Zune and articles like this spreading FUD are the biggest problem. I have 2 iPods and 2 Zunes and I take the Zune hands down. Problem is, ipod sales are driven by the illegal downloading of music. A trend that is unlikely to be reversed.

Anonymous | 2/4/2009, 1:25 pm EST

@SkateNY:

Seriously? Living in the past? Xbox IS turning profits now. Cross platform games for Xbox sell double as compared to the PS3.

Ihvhelfd | 7/14/2009, 2:55 am EST

TEva89

Greg | 9/16/2009, 7:15 pm EST

Wow, all 5 people who own Zunes also read Rolling Stone. Too bad they can’t read the writing on the wall.

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