Microsoft Sees 54 Percent Drop in Zune Revenue

Submitted by lalit on January 23, 2009 - 3:07pm.

Microsoft’s Q4 2008 filing with Securities and Exchange Commission indicates that the company’s Zune sales revenue was down by $100 million compared to same period in 2007. This is 54 percent drop in Zune product related revenue from last year. Lower sales of new Zune models have been blamed for this decrease. Microsoft introduced new Zune models for 2008 holiday season, but than also sales have gone down.
The Entertainment and Devices division that oversees Zune and Xbox 360 brought in $151 million in profit, but it was mainly due to improved Xbox 360 sales and PC entertainment sales. It’s believed that Microsoft will slowly phase-out the unsuccessful Zune music player, as it hasn’t been able to gain any ground against the iPod media player from Apple.
Microsoft has already tried two different approaches to conquer Apple’s market dominance in music business. Microsoft first tried with Play For Sure open system approach, where it licensed its technology to various MP3 manufacturers and than it tried with Zune’s closed system approach. Both the times, Microsoft has failed miserably; it will be interesting to see what will be Microsoft’s new step in music business.