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Microsoft may stop making Zune devices

The tech giant's move is a response to weak demand for the music and video players, a line launched in 2006 to compete with the iPod, a Bloomberg report says. Microsoft will continue to distribute Zune software, however.

March 16, 2011|By Nathan Olivarez-Giles, Los Angeles Times

Microsoft Corp. may discontinue its Zune music and video player, a move that would end a five-year effort to chip away at Apple Inc.'s popular iPod.

The technology giant plans to continue distributing the Zune software, however, according to a Bloomberg report.

The Zune music and video software is currently available on Microsoft's Xbox 360 video game system, Windows Phone 7 operating system, and Windows desktop software, and that will remain the case, the report said.

Because of tepid demand for Zune players, production will cease, and once those in stock in stores sell out, that will be the end of the Zune's shelf life, the news service said, citing unnamed sources.

Microsoft, for its part, isn't quite confirming or denying the reported plan to kill off the Zune devices.

"We're absolutely committed to providing the best movies, music, and TV show experiences through Zune on Xbox, the PC, Windows Phone 7 and Zune devices," Microsoft spokeswoman Caitlin McCabe said in an e-mail. "We'll share more information about the evolution of the Zune entertainment service and Zune hardware as future plans develop."

Aside from Zune software, Microsoft offers a Zune pass subscription service, which allows users to stream an unlimited number of songs and keep any 10 they want each month, to any Zune software compatible device — the Xbox, Windows Phone and Windows computers — for $15 per month. Microsoft also sells a yearlong Zune Pass for $149.90.

The first Zune player was released in late 2006 as Microsoft's answer to Apple's smash iPod music player. Over the years, the Zune has seen its share of updates and even added features that many iPods lacked, such as radio reception and the ability to play high definition video to TVs.

But the Zune has failed to match the sales success of the iPod, and the last new hardware release for the Zune came in September 2009 with the release of the Zune HD player.

Last year, Apple's iPod topped the market for portable music and video players with 77% of unit sales, while the Zune wasn't even ranked in the top five, according to data from the NPD Group research firm.

Microsoft was beat out by not only Apple, but also SanDisk Corp., which came in second with a 7% share of the market, Mach Speed with a 4% share, and Sony Corp. and Coby Electronics Corp. with 2% each.

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