“Microsoft Should Abandon Zune”, Say Investors

Jul 30th, 2009 | By | Category: iPods & Portable Media Players

Microsoft’s weak quarterly earnings report is pushing some to call on the company to abandon its once-hyped “iPod-killer”, the Zune.

According to a Marketwatch story, investors think it’s time to dump the Zune and focus their attention on competing with Apple’s iPhone:

“The market reception for Zune is so disappointing that many retailers have even stopped selling it altogether,” said George Kurian, a vice president at Tradition Capital Management LLC, which owns Microsoft shares.

Kurian said Apple has successfully outflanked Microsoft by shifting its iPod users to higher-margin devices like the iPhone.

“Microsoft should abandon Zune and follow Apple’s strategy to try to make its presence felt in the high-growth smartphone sector,” Kurian said.

The Zune had a lukewarm reception when it was introduced, because the device failed to significantly differentiate itself from both the iPod and other iPod competitors. Marketing blunders, like the PR fiasco of the Zunepocolypse and Microsoft’s inability to generate interest with teens, have caused Microsoft’s Zune revenue to plummet.

What do you think? Is there still hope for the Zune brand? And is there any hope for a Zune phone?

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14 Responses to ““Microsoft Should Abandon Zune”, Say Investors”

  1. ZuneFan says:

    If anything is killing off the Zune, it isn’t Microsoft, it’s all the Apple fanboy bloggers. From day 1 the fanboys have been trashing the Zune without even bothering to try one out.

    Have you even tried other players before you go blow your wad on an iPod?

    Wake up, fanboys! The Zune is better than the iPod in just about every way, plus no Apple tax.

  2. John says:

    I have had a Zune 80 for over a year and a half. I love it. I plan to get a Zune HD when they are released in the fall.

  3. Lon says:

    I have also had a Zune 80GB, since the first day it came out. I love it and honstly feel that if it weren’t for the inflated hype behind the IPod that it would be no contest. People buy the iPod for the same reason they buy Hollister when shopping for clothes, name, not quality.

    I am however dissapionted that the next generation of Zune HD will not have a phone feature. I don’t just think, I know this is a huge mistake on Microsot’s end. As it is now I carry my Zune and my Cell Phone around with me, it’s annoying. I would like a device that does it all. I won’t buy an iPhone, it’s just a name but I will probably be picking up a Storm this year as opposed to the Zune HD. I wish I wasn’t but I want an all-in-one. Every other company understands it so why doesn’t Microsoft?

  4. msbpodcast says:

    And now the Zune fanboys are going to find out the difference between a start up, with its focus on the product, and a big company, with lots of irons in the fire and a propensity to pull them out of one spot to another, regardless of a product’s technical merit.

    Microsoft has a responsibility to its shareholders, not to the Zune fanboys, and that’s a major downside of becoming the size of Microsoft.

    Apple still has a much smaller share of the market and its stock is still on the rise, despite the economy.

    Microsoft stock is losing value, and they are even more beholding to institutional stock holders (who might as well be tone deaf.)

    Bye bye Zune. We hardly knew ya.

  5. msbpodcast says:

    “What do you think? Is there still hope for the Zune brand? And is there any hope for a Zune phone?”

    Mope. Not a snowball chance in Hell.

    The problem is not with the Zune but where its coming from: Microsoft.

    Microsoft is perceived as a business software company by the various institutions who have actually shoveled trillions of dollars into Microsoft’s coffers over the years. (The piddling amount you’ve actually spent on a Zune doesn’t even show up as a rounding error on a rounding error on Microsoft’s monthly cash flow.)

    The Zune, X-Box and other distractions were excusable in good times but now these institutional investors want their money and can do without those distractions (read: expensive, money losing, hemorrhages on the cash flow.)

    The institutional investors just want ROI, and the zune just isn’t cutting it for them.

    I think that the institutional investors have the economy exactly backwards, but they never ask me, or anybody else for that matter, they “TELL” instead and if your company is listening, they’re taking their money elsewhere.

  6. Voicer says:

    It’s foolish to write off the Zune…I’ve tried both iPod and Zune and prefer the Zune by a large margin. But personal emotional investment (as apparently certain Apple fanboys have) into a device is no basis for a monetary investment in a company, and here’s where the Zune has a big advantage with the infrastructure MS has built with Xbox and the other software/services it has. Yes, things are slow now due to the recession. But recessions end, and companies need to position themselves for that, because that’s when pent-up demand is going to not only show up, it’ll be smarter demand in those looking for integrated systems. As Lon said, the big drawback is the lack of a Zune phone, but who knows what’s down the line?

  7. techpops says:

    The poor old Zune, technically very good, it did have a chance once of eating into Apples monopoly on portable music playing, but it blew it coming out at almost the same price. If they’d just taken massive losses on the first generation and grown a little bit of an audience, used that to help them get a better store together.

    Really it doesn’t matter anymore, Apple has changed what a portable music player is. You can also play games on it now, run apps and tap into everything the iphone has, except calls. Microsoft has no way of competing with that, without launching its own smart phone.

    It is a big shame the Zune is in such trouble, I really like the hardware, and the software has improved considerably. It’s more format friendly and if it could drop some of the more expensive tech and gets it price down, it could rule the entry level market for music players. Which has to be better than just dropping it altogether. Logistically that might not be possible.

    On the plus side, if it does get wiped out, prices are going to drop like a stone on both versions and much fun will be had by anyone that doesn’t care about it not being an ipod and just enjoy all that tech at giveaway prices.

  8. Quikboy says:

    The Zune HD will be released in about 2 months, that’s going to be pretty awesome device. If consumers would actually research and try other PMPs, instead of getting an iPod because everyone else has one, then it would certainly help to pull some typical iPod mindshare away. Microsoft just as to wow people a lot more, and the Zune will be making Microsoft some good dough.

  9. msbpodcast says:

    “try other PMPs”

    Who the hell writes things using Three Letter Acronyms (TLAs) like “PMPs”?

    Must be some nerd code monkey who can’t even see the wall through his Buddy Holley, National Health glasses, never mind the handwriting on it.

    Write in English and you might find that people are willing to read your words.

    TLAs and other obfuscations are just cliquish ways of “not” communicating.

    I look forward to the Zune coming out and getting reviewed by TLA spewing nerds who will do more to put a nail in the Zunes coffin than merely shutting up would do.

    Getting reviewed by C|Net is NOT mass media exposure. Its marginalization.

  10. zune lives says:

    Having a Zune and access to audio books and college have changed my world. I love my Zune almost as much as I love my family. Zune fan hit the nail when talking about apple fan-boy bloggers!

  11. oystercatcher says:

    I doubt that apple fans have anything much to do with microsofts repeated consumer product failures.
    Right now I have a sansa e260 running rockbox with a mix of ogg and mp3 files. my next purchase will be
    an olympus ls-11 as it has stereo record capabilities.
    Alternatively the newest video cameras with flash memory are just as interesting. I agree with the iphone users in that multi format capable devices have somewhat obsoleted mp3 players.
    Oh I never download music preferring to rip cd’s, besides any music with drm is just stupid (from the consumers standpoint)

  12. Microsoft should jus tleave the earth, what’s better than an Ipod? and please list specs

    POS System Software

  13. David says:

    I have a Zune and have loved them for a long time. They kill iPods. With the new Zune HD, they DEFINITELY kill iPods!

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