Zune Sales Drop 54 Percent As iPod Sales Up 3 Percent

In a technological tale of two cities, Microsoft reported quarterly sales of its Zune media player fell by 54 percent as demand for Apple’s dominant iPod rose by 3 percent.

The $100 million drop in Zune sales came amid word Friday Microsoft would lay off up to 5,000 employees.

A number of factors are part of the contrasting sales picture. “It’s the category, it’s the business, it’s the economy,” Zune marketing director Adam Sohn told Macworld.

By contrast, Apple reported selling 22.7 million iPod during the December quarter, numbers that surprised analyst that thought with 70 percent of the market, further growth was unlikely.

Possibly hinting at the Zune’s poor performance against the iPod, Microsoft chief Steve Balmer told the Financial Times the market for MP3 players had eroded. The software giant was “all but ready to throw in the towel on the Zune,” the newspaper concluded.

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Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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Chris
If you’re going to make a comparison, at least compare based on the same metrics. The Zune revenue dropped by 54%, but the Ipod revenue also dropped by 16%. Not nearly as steep, but there’s been a few more iphone/ipod revisions in the past year than zune revisions.
The Zune will never come close to touching the Ipod (although both are sitting next to each other on my desk), but at least compare Apples to Apples… for lack of a better term.
imajoebob
To me, the difference between Apple and Microsoft comes down to a single word: Focus. Apple’s focus is tighter than a laser. From their hardware to their software to their product extension to their marketing. Even their fumbles (AppleTV, mini) maintain that focus. Microsoft doesn’t seem to know how to spell it.
Perhaps the real problem is Microsoft’s inability to appropriate (i.e. steal) focus from competitors. The Xbox is an example. When introduced it was an instant hit. Reviewers and players loved it. Despite the usual MS problems with long-delayed vaporware, they actually managed to release during Xmas shopping time. It was the must-have item.
Since then they’ve done almost nothing, and done it wrong. It was touted as a “convergence” platform form computers, gaming, and media. When the original chip was discontinued the replacement wasn’t backward compatible with old games. Perhaps most ironic, MS needed so many PowerPC chips that IBM didn’t provide the R&D Apple needed for a G6 processor. Apple went to Intel, and we all know what that did to Apple (and Windows) sales.
If MS had focused on continuity and development of the Xbox it could have been their platform for launching Zune, and perhaps many other products. As the iPod started as an extension of the Mac, instead of designing Zune for a kludgy PC interface, it could have used Xbox. It would then be the basis for using the Xbox for your digital music collection.
Now, thanks to basic neglect, the Wii has cleaned its clock, and it’s the poor man’s alternative.
If I can do this kind of analysis in ten minutes, you’d think MS would have done it in a couple years time. But they don’t have – maybe don’t want – the necessary focus. It’s a company that runs on inertia, and nothing moves forever unless you give it an occasional push.
http://www.coffeerama.com coffee
Revenue for the Zune might be down because of the recession, or it could be because people are afraid it will freeze up again next New Year’s Eve