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Time to axe Microsoft's Zune

Less really is more

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Comment If any Microsoft product group is a candidate for getting the chop during the next 18 months, surely - surely - it's the one leading the disastrous Zune.

Either the technology people building it, those in marketing promoting it, or the channel group responsible for working with retailers to put the thing in the hands of consumers.

In a season - the Christmas shopping period - when consumer gadgets are supposed to fly off retailers' shelves, Microsoft's Zune experienced a stunning $100m drop in revenue, a 54 per cent plunge. Even Microsoft was surprised.

But once again, Microsoft has insisted it's not going to kill the Zune and remains wedded to the pocket-sized albatross around its neck.

Microsoft's director of Zune marketing Adam Sohn has reportedly promised the "next generation" in Zune hardware and software this year. "Planning is fast and furious," he said.

Sohn blamed three things for the collapse in sales: the economy, a "shrinking" product category, and the fact that unlike last holiday season, Microsoft didn't bring out any new devices to entice shoppers. In late 2007, Microsoft had just released the 30GB Zunes.

To be fair to the Zune, the Christmas retail season was particularly tough.

Yes, the economy sagged. And Apple's iPod revenues dipped 16 per cent. But Cuperino sold three per cent more iPods than the previous year.

If this is a shrinking product category, why is Microsoft so invested and planning more Zunes? Microsoft will try to explain this in terms of planned "Zune services," no doubt.

The fact is that any problems the Zune had were unique to the Zune and were only exacerbated by this brutal holiday season. The Zune fell more than twice as much as the iPod.

If you want to understand how badly the Zune is doing, go into a high-street electronics goods retailer. If you can find a Zune, it'll invariably be hidden away at the back as an afterthought or lost in some other display.

Are retailers responding to a lack of consumer demand for the Zune or are retailers failing to drive demand by pushing the product? It can only be the former, as retailers are generally quick to spot a high-street trend they can capitalize on. If it's the latter, then Microsoft's Zune team is not applying the lessons of the early Windows and PC years, when Microsoft built a product people wanted and then worked with channel partners to keep promoting it, with money for retailers and other offers.

Sohn promised more - more tweaking and more finessing. But less is more in the case of the Zune, especially for a company that's supposed to be cutting costs, not throwing good money after bad. ®

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