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Microsoft (MSFT) Zune sold out?

It may be hard to fathom. The Zune portable multimedia player, introduced over a year ago, is selling out. Microsoft (NASDAQ: MSFT) could not give the first version away. Its attempt to take market share from the first place Apple (NASDAQ: AAPL) iPod was a very public failure.

But, the world's largest software company came out with a new and improved version for this holiday, and it appears to be a hit. According to the Associated Press "the 80-gigabyte Zune media player Microsoft launched Tuesday has sold out across the Web, to the dismay of online shoppers and delight of the world's largest software maker." There is talk of 10-day delays for Zunes ordered on Amazon.com (NASDAQ: AMZN).

The lack of availability of the device may seem like good news for Redmond, but it isn't. It may get the company some PR about the popularity of the new device, but the software company can't gain market share against the iPod if it does not have inventory to sell.

Microsoft may lack skills in terms of manufacturing hardware devices and managing its supply chain. Apple has been at the hardware business for well over two decades.

On reflection, there is nothing to celebrate about a Zune shortage, except at Apple.

Douglas A. McIntyre is an editor at 247wallst.com.

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Last updated: September 05, 2008: 01:51 AM

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