Zune sales plummeted during holidays
(Credit:
Microsoft)
There were plenty of weak spots that led to Microsoft's disastrous December quarter, but one that didn't get much attention Thursday was how badly the Zune did.
Tucked away in Microsoft's quarterly filing with the Securities and Exchange Commission, however, was a startling figure.
"Zune platform revenue decreased $100 million, or 54 percent, reflecting a decrease in device sales," Microsoft said. That's quite a drop.
Apple, by contrast, saw its iPod unit sales up 3 percent, while revenue dropped by 16 percent. It still racked up $3.3 billion in revenue, as compared with less than $100 million for the Zune.
In an interview Friday afternoon, Zune marketing director Adam Sohn said a number of factors were to blame.
"It's the category, it's the business, it's the economy," Sohn said, noting that despite a software upgrade, Microsoft entered the holidays with essentially the same hardware it had a year earlier.
In November, Microsoft chopped the prices on its flash-based Zune devices amid both competitive and broader economic pressures.
That meant that revenue was somewhat lower than Microsoft had projected, although Sohn insisted that unit sales were basically in line with what the company had figured on.
"We met our internal plan for (the) holiday," he said, adding that a year ago the company was also boosted by strong sales of a heavily discounted, older 30GB hard drive-based model.
With Microsoft announcing a variety of big cost cuts on Thursday, there were plenty of people suggesting Microsoft should just exit the Zune hardware business entirely.
This posted was updated at 4:20 p.m. PST with comments from Microsoft.
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
What Microsoft needs to do is pronounce the Zune dead long after it was removed from life support. And this, despite their numerous Zune apologists.
Zuneophiles need to give it up ? and there are so many of them on the blogosphere, many more than people who actually own the ill-conceived device. How does that happen? More people write glowing love letters about their Zunes than people who actually own them.
It?s difficult to let go of someone important in our lives once they?ve died. But the fact is, the sooner you begin the grieving process, the better off you?ll be in the long run.
while Ms makes something like $40-50 Billion
so money really doesn't matter for MS
the Zune is only to **** Apple off !
they should kill the Zune and
concentrate more on their core products
same with search and Live.com services
they r never going to beat google at their game
but yet they keep posting losses and continuing
Ms just has too much money for their own good !
called a "soft return"
where you can type a line
and not have to press Return
when you want to start a new line.
I picture MS as a gigantic octopus with tentacles reaching out every which way.
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LOL - it's Yivo! Come on, love the tentacle!
They also missed Search and Portable Music which makes them all the more paranoid.
They will miss the next big thing too, because their focus is more on preserving legacy products that make heaps of money and less on new things which are risky and usually loss heavy.
The Zune is irrelevant.
And after all, that's all Microsoft was competing for because they know the iPod's mindshare is a lot of what brought Apple back from the dead
Laserdisc, I don't see how you can compare the Zune to the iPod Touch; it's not even the same type of player. For one, I have a 1st Gen iPod Touch and Apple didn't leave me in the dark. In terms of software I'm completely up to date. For another thing, the Zune doesn't have even close to the capabilities of the iPod Touch.
Apple doesn't need the Zune in order to improve; Apple needs a true competitor. That having been said, Apple never relied on competing technologies in order to do what it does best. They ofen lead the way and, smartly, let others follow. It's not Apple's fault that so many people like their products.
Laserdisc, I don't see how you can compare the Zune to the iPod Touch; it's not even the same type of player.
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You missed the good part Myles. He actually thinks that M$ will push out a firmware update that will turn a 30G zune (which ironically freezes up whenever it counts more than 365 days in a year) into an iPod Touch!
This is the kind of person who buys a zune and yes, there are dozens of them nationwide. In fact there's one born every minute!
This is the highest caliber reasoning and logic I've ever seen. You should be on David Letterman!
Don't waste your money on a Zune or an Ipod. Plenty of other players out there at half the cost that do the same things. Unless ofcourse your an Apple or MS fan boy then by all means buy the over priced stuff just to be cool and have the nice name and logo. I love to watch the Apple fan boys vs the MS fan boys on stuff. Free entertainment at it's best!
In creating Zune, MS stuck it to its traditional hardware partners (as in the WinMo and Windows model) by shunning PlaysForSure. By not aggressively investing in the hardware, MS then undermined effective iPod competition. It's too bad because Apple has it too easy (obviously, with 22.5 million iPods sold in 3 months).
seven7dust. Microsoft made $4.7 billion dollars this past quarter, but $2.1 million of that amount was probably from their comcast stock dump early this week. Also, Microsoft is still committed to stock buyback plans, which means that they will actually have negative cash flow again once all of the paperwork is filed. If this quarter's analysis is like last quarter's, then Microsoft will have $1.3 billion dollars of negative cash flow overall.
'k, let's suss this out. MSFT did say they'd slow down the buyback plan, so that much is correct, and I doubt that MSFT could afford to show a sum-total loss for another quarter. OTOH, he or she is right - the Zune is a gangrenous limb that needs a serious sawing-off. That much is pretty bleeding obvious to anyone with working neurons.
Seriously - take a chill pill. Just because that gurgling sound is coming out of Redmond is no reason to get all uncivil at the general population, kid... Me, I don't mind, I'm used to you clowns resorting to anger whenever you lose an argument or debate, or when your source of worship stumbles.
OTOH, leave the general population alone. He/she might be wrong on a fact or two, but damn - it's asshats like you that make MSFT look plain ugly.
(...and shouldn't you be polishing your resume, or did the MSFT Astroturf division only cut 50% of you?)
/P
who shoved an apple up your ass?
But there is hope. The iPod has competition coming: cell phones.
More devices are carrying internal and external memory expansion that, with time, will mature to price the iPod out of the marketplace. With access to the internet, cell phones can stream music from the internet. With bluetooth and wireless USB, cell phones will be able to stream your MP3s and internet broadcasts to any device that supports these wireless protocols.
2. No one is going to be able to compete with Apple on memory expansion prices. Apple probably buys more of the stuff than most of their competitors combined for the iPod line, and thus probably gets the best prices by far. Apple has plenty of margins available to stay competitive.
3. Your original point is still valid: everything works with the iPod, and few things work with most iPhones which often don't even have a standard headphone jack.
That said MS might want to stick around for a little while longer to build up the Zune store. That way, they will have more momentum if they ever move Zune playback (DRM'ed files) to the Windows Mobile platform. Windows Media Play mobile works but it sucks compared to the Zune or iPod interface.
Plus, Zune's service ($14/month all you can eat Zune Pass) and the application are orders of magnitude better than iTunes.
Not true about competing with Apple on price/storage.
The LG Incite touch screen smart phone is $99 after rebate. You can buy a 16GB microSD card today for $99. That is $100 less than the 16GB iPhone. The Incite also supports up to 32GB.
way less than that
amazon right now:
http://www.amazon.com/SanDisk-SDSDQ-016G-A11M-Sandisk-16GB-Microsd/dp/B001F6YRNO
bam.
The zune software is leaps and bounds ahead of apple's. iTunes look exactly the same as it did when it first started. I'm waiting for my ipod to die to go out and get a zune. Apple hasn't done anything with the classics in years. Its depressing
/P
Apple fans are largely, indeed, zealots. But at least they know the difference between a personal computer in their pockets, and bucket of nails.
they use the device for everything other then calls
GPS,internet,Music streaming etc to name a few
and then complain about poor battery life !
Which is why I have a Ipod touch too !
A cell phone should be for calls/messaging only
if they release a tethering phone that works with the IPod touch
it would be even more of a awesome combo
Microsoft IS A SOFTWARE COMPANY... its business model is entirely based around selling software... hardware seems to be an after thought and M$FT seems to have no clue about how to make money from selling hardware - it just doesn't seem capable.
So, although in the broad industry called Computers/Comsumer Electronic these two companies are fundamentally different.. which is why Apple excels at selling hardware and M$FT has 90% share of the operating system market....
=:~)
What? iPod sales saw a smallish increase?
Well, it must be because the Zune sucks.
MS should have axed this department in its first round of layoffs.
Microsoft has always been a spastic marketer.
"Zune platform revenue decreased $100 million, or 54 percent, reflecting a decrease in device sales,"
So... Even Microsoft acknowledges that the Zune sucks... after all.... according to that statement.. they expected to have 54% decreased Zune revenue.
Zune could be better on some points, but the truth is there is nothing really wrong with the zune, or with windows. Before someone attacks me, I'll point out I was a programmer for apple when I was 15, had offers to work at Atari back then, and have been watching apple vs microsoft for 30 years now. I've also sold apple computer and worked in apple labs. I'm not saying that to impress, but to impress upon you that I'm no newbie. I'm well aware of the very subtle things (and not so subtle) that apple does. As for the devices, there are things that are problematic about ever music player. Just the proprietary format used on ipods are something I think that isn't so hot. And now they are dropping the protection etc... It never was a good idea to begin with. That said, I think a lot of zunes success has to do with it's perception of the brand and not the product. Zune could work out some rough spots, but again I feel it's 90% the fact that ipod was more established and people would diss zune etc. So it had a huge uphill climb to begin with.
Prolly not. Most iPod/Zune/PMP owners don't bother reading what's on the geek sites. Instead they listen to their friends. They watch the news when reports like, oh I dunno, the Zune taking a dump all over itself due to a simple and stupid leap-year coding error, are blared all over the evening news.
That, and I don't know of any self-respecting demographic that would buy a music player that "squirts"...
/P
An absolutely unbelievable comment.
Little wonder that Microsoft apologists get no respect.
Little wonder that you suggest that people don't "attack" you, knowing full well that what you're doing is provoking attacks.
Get help. Soon.
As for Zune itself, it's percention can get worse all by itself when all that is updated is the software, this is by Microsoft's own admission last year. Anyway my main point is, when the marketshare tables are turned, examining Zune on it's own mertis, it's no revolutionary underdog product like the Mac has been. When Zune dies, hardly anyone will miss it.
- by alegr January 23, 2009 8:50 PM PST
- Zune just doesn't have any sexiness. When you see it, you don't feel like you want it now. Looks like MS hired marketing folks from IBM, those guys responsible for promoting OS/2 to the masses (or Ozzie brought them with him?). That stupid color choice and retarted "squirting" tells all.
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- by lemieuxd January 24, 2009 8:49 PM PST
- It looks quite "plasticky" . MS should have done a better job and could have. At least they did take advantage of some of Apple's shortcomings (headphones). They could have done much better though.
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- by oxtail01 January 26, 2009 3:46 PM PST
- Sexiness isn't a requirement for what it does. Only easily influenced status concious little boys and girls are swayed by it.
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