Buried in Microsoft’s quarterly filing with the Securities and Exchange Commission for its recent results is the revelation that Zune sales dropped by US$100 million in the quarter, a 54 percent drop compared to the same quarter a year ago. In comparison, Apple saw a three percent increase in its iPod sales in the same quarter (although revenues dropped 16 percent).
“It’s the category, it’s the business, it’s the economy,” said Zune marketing director Adam Sohn to explain the drop. He also recognized that part of the problem was that the Zune hardware was relatively unchanged since last year. Zune’s biggest update was the release of the Zune 3.0 software.
Will Microsoft abandon the Zune platform? It is too early to tell but I’m sure that many at Microsoft are looking at how it fits into its overall entertainment strategy. Could the rumoured Zune Pink be the device to turn the Zune fortunes around?