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Fri, Mar 12, 2010 - 04:59 PM EST  —  AAPL: 226.60 (+1.10, +0.49%)  |  NASDAQ: 2367.66 (-0.80, -0.03%)

Microsoft’s Zune debacle: $100 million revenue decline in holiday quarter
Friday, January 23, 2009 - 09:33 PM EST

"Microsoft's newly-announced layoffs and declining profits aren't the only bad news in Redmond -- according to the company's quarterly statements, Zune platform revenue decreased $100 million, or 54 percent compared to the same quarter last year, due to falling device sales," Ross Miller reports for Engadget.

"Meanwhile, Apple saw a three percent increase in iPod sales over the same period, so we're anxious to see what Microsoft has planned for reviving the social," Miller reports.

MacDailyNews Note: Last quarter, Apple sold 22.727 million iPods and the company's iPod+iTunes platform generated $4.382 billion.

Full article here.

MacDailyNews Take: The "social" would've had to have been alive first in order to be revived, Ross. Zune was pitifully and obviously stillborn.

[Thanks to MacDailyNews Readers "Milind," "Jubei," and "PalmerD" for the heads up.]

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Reader feedback page 1 of 2 pages:  1 2 >
Jan 23, 09 - 09:38 pm Comment from: Glossy is Good

Glossy=good

Zune=bad

Jan 23, 09 - 09:49 pm Comment from: Mac-nugget

Since it's Microsoft made the mistake of creating the zune, I have only seen one in the wild. Yes, it was a brown one at that. It was horrible, even compared to a 5 GB first generation Clickweel-less iPod.

Jan 23, 09 - 09:58 pm Comment from: Turd Breath

Hard to be "social" when you're the only turd in the building with a Zune. You pretty much have to download some porn and "Zune yourself."

Jan 23, 09 - 10:06 pm Comment from: Passerby

A 54% revenue drop is only $100 million? That's not much. That means revenue the same quarter last year was less than $200 million.

I wonder what profits were?

Jan 23, 09 - 10:19 pm Comment from: moiety5

"profits??" I don't think the Zune division, much like the Xbox division (oh wait, same division) knows what those are.

Jan 23, 09 - 10:19 pm Comment from: PalmerD

@Passerby

According to the 10-Q, that's the entire Zune platform. From what I can tell that means the Zune Marketplace and Zune subscription service. Wow!

And Microsoft's Zune blogger (Zuneinsider) just got hit in the layoffs. So they're cutting from the Zune project.

Then you have that DRM'd MSN Mobile Music that hit the market the other day.

Looks like MS is losing interest in Zune before I thought they would.

Jan 23, 09 - 10:25 pm Comment from: Goobi

@Turd breath: LOL! That was epic!

Jan 23, 09 - 10:35 pm Comment from: Jubei

Give it up Microsoft, that piece of Turd PooPee deservers to die. You already screwed your Playforsure Partners, you might as well screw your social customers. You know the 12 or so owners of the Zune. ahahaha

Jan 23, 09 - 10:45 pm Comment from: Petra

Zune? What is a Zune? Lost more then half the sales and your selling a product at less then cost! How long is any company, any company, let alone Microsoft going to continue a product before they can it? That division of Microsoft has been losing money from it's inception. The Zune is a product that Ballmer has written off as a looser to the iPod. If Microsoft thinks it's a looser I can't see Zune surviving an update let alone a reorder from the manufactures. I'd say it'll be discontinued before the end of the year, my feeling is it want make it to the end of this quarter before Microsoft quietly announces the end of the Zune Turd.

Jan 23, 09 - 11:29 pm Comment from: KenC

So, if a $100M drop represents 54% of last year's revenue, that means last year's revenue was $185M, and this year's is only $85M. Wow!

MS sold $85M Zune stuff in Xmas, while Apple sold, what? $4.4B!!! That's Billion, with a capital B. Or, 51x more sales of iPods and iTunes stuff than Zune stuff. Amazing. 51X.

Jan 23, 09 - 11:34 pm Comment from: Zune Tang®

You smug and insecure little MAC lemmings don't know what you're talking about. Microsoft is only getting started with Zune—and what a magnificent start it's been! From the hip and edgy advertising to the FM radio to the innovative and flexible built-in social networking tools Zune has knocked the I-Pod off its perch forever. I see a Zune everyday. In my hand and it ROCKS!

When is MAC going to get tired of being kicked in the ass by the masters in Redmond? I still don't see an FM radio on the lowly I-Pod and don't get me started on the App Store disaster on I-Tunes for the silly I-Pod Touch. The only thing MAC does well is marketing and the media's recent fawning over MAC's crap is disgusting.

Your potential. Our passion.™

Jan 23, 09 - 11:36 pm Comment from: Derek in Milan

What it means is this:

If an average Zune sells for , say, $150, then the Evil Empire sold about 600,000 zunes last year.

Ipod sales were in the order of 60,000,000, so the zune is taking a big ONE PER CENT of the iPod sales.

If iPods are at around 75%, then the zune has about 0.75% market share.
Wow.

They really should quit while they are ahead.....

Jan 23, 09 - 11:38 pm Comment from: Derek in Milan

The Zune Tang tells it like it is!
Damn, I wish I had the balls to own a Windows machine......

Jan 23, 09 - 11:59 pm Comment from: DogGone

I'm waiting for M$ to kll the Zune, ditch the marketplace and screw all the twats that bought those monstrosities.

Jan 23, 09 - 11:59 pm Comment from: daemon

This is deja vu on IBM's PC jr. death spiral.

They (IBM) cut prices Holiday season to save face w/sales numbers. MS tried that. The PC jr. was killed in the spring.

I thought MS will kill Zune around April or no later than July 1.

WIth all the job cuts, could be sooner.

Jan 24, 09 - 12:18 am Comment from: ken1w

MDN caption on the photo ("Microsoft's Zune made a big splash") is a classic. If that line was use in prior related articles, I never noticed. Thanks for the laugh.

If jobs are being cut, the Zune (and Zune Marketplace) should be the first product line to get the ax. But knowing Microsoft, they will keep it around for a few more years...

Jan 24, 09 - 12:40 am Comment from: HMCIV

Zune wasn't stillborn. It was the product of a coat hanger abortion.

Jan 24, 09 - 01:00 am Comment from: pDk

Boy, I tell ya...
Pootie Tang keeps talkin' about that FM radio like somebody actually listens to it and anybody who doesn't have it is missing something.
Yo, the reason for the iPod in the first place is that FM radio stopped playing music a long time ago!

Jan 24, 09 - 02:11 am Comment from: Mac Daddy

$100 Million? Apple coulda made that just off the Fart App, if they hadn't kiboshed it.

Jan 24, 09 - 05:01 am Comment from: Road Warrior (nli)

Gosh Zune Thang, even reality is starting to shake for you..."Microsoft is only getting started with Zune" that was like 2 years ago, and they are backpedaling. You have have all the so called innovative features you want but the platform revenue is decreasing, going down, like flushed down the toilet, for everyone save you of course. With the Zune in one hand and the blood flow from the brain device in the other your rocks must be going off constantly.

There is something else that the iPod does well apart from the iTunes and iPods...and that is to get the hard core sales.

Your gods have spoken: "Zune platform revenue decreased $100 million, or 54 percent compared to the same quarter last year, due to falling device sales,"

The Macs #s are of course up. But feel free to continue your rant, it is understandable with your constipation and lack of blood flow.

Jan 24, 09 - 05:06 am Comment from: Little Neddy

Zune Tang I have missed you!

I would be a little concerned about having it in your and and it being hard though. Some people might get the wrong idea.

Jan 24, 09 - 05:09 am Comment from: Little Neddy

Sorry! My emotion at Zune Tang overwhelmed me (and my typing) - that should have read:

Zune Tang I have missed you!

I would be a little concerned about having it in your Hand and it being hard though. Some people might get the wrong idea.

(The magic word is hotel - Zune Tang is this prophetic?)

Jan 24, 09 - 08:20 am Comment from: clunker

At any other company, any product that sees a 54% sales drop either gets replaced or killed. Same goes with the sales guys behind the product.

So, MS, what are you gonna do with Zune?

Jan 24, 09 - 08:23 am Comment from: marked

Glad I got my Zune Forever tattoo.

Do you show it off with your "Spring Break 1996" tattoo? LOL

Jan 24, 09 - 10:36 am Comment from: Flackman

Zune Tang must be a neoconservative Republican. He too lives in utter delusion.

Jan 24, 09 - 10:42 am Comment from: Arnold Ziffel

Possible new MS ad copy:

Zune: Well on its way to becoming a coprolite!

Jan 24, 09 - 11:10 am Comment from: dijonaise

They aren't the only ones! Look at the SonyErikson ad over there. Free "walkman phone, free car charger, free bluetooth and free shipping.
A boatload of nasty Sony sheeite for free!
I know a 2 year contract pays for it but these are the top of the line?

Jan 24, 09 - 11:20 am Comment from: @Zune Tang

Glad (and laughing again) that you're doing commentary again!

It's one of the reasons I come to this site!

Keep writing! I'l keep laughing!

Jan 24, 09 - 11:24 am Comment from: Cubert

Social? More like a facial.

Jan 24, 09 - 11:27 am Comment from: Cubert

@Derek in Milan,
"If iPods are at around 75%, then the zune has about 0.75% market share."

Yeah, but they've got 100% of the market for shit brown music players.

Jan 24, 09 - 11:43 am Comment from: App cool

Zune? What's that? Never seen one in any shop or in use, on a train, plain,bus or on the street. Just iPod, iPod, iPod everywhere.Sure it's 0.75%? it may be less.

Jan 24, 09 - 11:47 am Comment from: Dobe

Get one now!
It will be a collectors item soon. Then it will be worth millions in about 1000 years!

Jan 24, 09 - 11:54 am Comment from: rancher

Zune Tang - what name will you use after Ballmer sledgehammers inventory and stops production of the Zooon?
How about 7 Tang? Vista Tang? Ruin Tang.
Make it good I love your posts.

Jan 24, 09 - 12:17 pm Comment from: Spark

The only downside of MS pulling the plug on the Zune is that it will make Zune Tang's comments irrelevant. ZT will need a new nom d'plume to author his missives. BAT Tang?

Jan 24, 09 - 01:04 pm Comment from: @Rancher

Will go back to his real first name. Poon.

MW: She - Aww screw it enough sophomoric humor for the day.

Jan 24, 09 - 01:32 pm Comment from: Glossy is Good

All you ZUNES are belong to the LANDFILL!

Jan 24, 09 - 01:58 pm Comment from: Cubert

@@Rancher,
No, Poon is Zune Tang's sister.

Jan 24, 09 - 02:12 pm Comment from: Al Lagoon

Zune sucks ass. I don't know which is more pathetic, a Zune, or a Zune fanboy. FM radio? Who listens to that crap anyways? Useless wifi "squirting"? To who? Renta music? Would I trust MS after the Plays for Sure debacle? Zune lives in the cesspool of irrelevance, where it will remain until MS knifes it in its sleep.

Jan 24, 09 - 03:12 pm Comment from: His Shadow

I went right past the article because it wasn't surprising. Then the light went: Holiday Season! MDN's take is spot on. The Zune is stillborn. But if I had a nickel for every jackass who said (and still says!) that the iPod is a "fad", I could fill then of a tube sock and beat a beaver to death.

Jan 24, 09 - 06:36 pm Comment from: BiZarRo BaLlmEr

Best invention= iPhone

Fave software,= Pandora, Flycast, shoutcast


Um,who needs fm radio? Oh yea, Zune users.

Jan 24, 09 - 06:39 pm Comment from: Gabriel

Funny… it was only a few weeks ago, January 7th at CES, where Microsoft's Robbie Bach was saying that Zune had "a great year" in 2008.

http://www.zunerama.com/forum/index.php?action=printpage;topic=12868.0

How quickly things change. Does anyone believe their BS anymore?

Jan 24, 09 - 09:37 pm Comment from: AA Attendee

I have never seen a Zune outside of a store display case.

Jan 24, 09 - 11:17 pm Comment from: dimplemonkey

It's as if millions of Zune dollars cried out and were suddenly silenced...

Jan 25, 09 - 03:29 am Comment from: Jubei

@Gabriel

Yep and he said more cars are Zune compatible or something to that affect. He probably looked at Aux input and called that exclusively Zune compatible. uh huh...

Jan 25, 09 - 06:35 am Comment from: I CAN HAZ TANG?

Welcome back Zune Tang® -- your posts are funny as ever.

Jan 25, 09 - 12:11 pm Comment from: Cubert

@AA Attendee,
Unfortunately, I have. 3 of my co-workers have them. Why, I don't know.

Jan 25, 09 - 01:29 pm Comment from: At the same time in Cupertino

Apple’s iPod debacle: $626 million revenue decline in holiday quarter

However, this dramatically reversed revenue trend remains a non-issue, since iPods still are a hobby for Apple. Microsoft lives or dies with the success of Zune.

http://media.corporate-ir.net/media_files/IROL/10/107357/09/AAPL_10Q_Q1FY09.pdf
Page 26, iPod sales
Holiday quarter 2008: $3,371 M
Holiday quarter 2007: $3,997 M

Jan 25, 09 - 01:36 pm Comment from: Hm...

Well, it finally appears that M$ can't buy their way into some markets. They sold Xboxes at a loss for years - and they were still whipped soundly by the Wii. Now, their second shot at music is falling apart. (Remember 'plays for sure'?)

Keep watch for them to try an insidious DRM deal with RIAA/MPAA to end-run the competition while screwing the consumer.

Jan 25, 09 - 03:06 pm Comment from: xbfcxnbm,

More than 96% of the world's personal computers operate with Windows. Using the same logic, OS X must be a total failure, too.

Jan 25, 09 - 06:09 pm Comment from: Passing Through...

$100 million? What is that in points?

Jan 26, 09 - 03:44 am Comment from: SkateNY

I don’t doubt that many or even most Zune owners are satisfied with what they have. Here’s my thing: Apple dove into the MP3 market when that market was already well on its way to maturity. The iPod quickly made a big splash, and iTunes has played no small part in helping the iPod acquire a 70% market share. Apple did not engage in illegal, monopolistic business practices in order to achieve that level of prominence; nor did Steve Jobs hypnotize buyers, steering them towards the iPod.

When the iPod was released in October of 2001, it succeeded during a recession caused by the terrorist attacks of 9/11. If the current economic climate adversely affected the Zune and other consumer products, then it stands to reason that it also adversely affected iPod sales. Yet, Apple reported a growth in iPod sales for the most recent quarter, versus a 54% drop in Zune revenues. How much better would the iPod have faired this quarter without the deepening recession?

I believe that Microsoft and its investors need to re-evaluate the Zune with regard to how it affects other products, and how it affects shareholder interests. If I’m a Microsoft competitor — and I don’t believe that Apple and Microsoft compete in the sense that they appeal to very different groups of customers — then I truly hope that Microsoft continues to throw money and other resources at the Zune. Let them and their investors learn the hard way. Again.

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