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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