Zune loses Microsoft $100m

 

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By Stuart Turton

Posted on 26 Jan 2009 at 14:39

Microsoft has announced that Zune sales plummeted 54% in the fourth quarter, fuelling speculation the company may soon call time on its iPod rival.

According to Microsoft's quarterly filing, Zune revenues were down $100 million. The result will be particularly galling for the software maker, given that Apple saw iPod sales increase 3% over the same period.

The Zune has been kicking around since 2006, but has yet to find its way past North American shores. The second generation Zune was rumoured to be hitting the UK and Europe in 2008 but never arrived.

Despite the disappointing figures, Microsoft insists it is "deeply committed" to the Zune and has met its "internal plan" for the device, noting the tough economic climate. However, analysts and industry watchers haven't been quite so forgiving.

"In light of the most recent numbers and Microsoft's self-professed desire to cut costs there's no point left in pretending the Zune's not a failure. Time for Microsoft to cut its losses and move on," says Silicon Alley Insider.

The Zune may not have arrived in the UK, but Microsoft's mobile music store is here, complete with DRM. Read our interview with Hugh Griffiths, Head of Mobile at Microsoft UK, to find out more.