Microsoft (NASDAQ: MSFT) is about to launch the latest version of its Zune multimedia player. It should avoid the humiliation. The Zune has sold about two million units since it was launched. The rival Apple (NASDAQ: AAPL) iPod has sold over 150 million units.
According to MarketWatch, "Microsoft is hoping consumers will be tempted to buy a Zune rather than an iPod due to the device's ability to more actively distribute music among friends and contacts established through the company's online marketplace."
A question to management in Redmond: Why lie to yourselves?
This is actually a perfect time to kill the Zune player. It is part of Microsoft's entertainment and device division. That part of the company makes and market the Xbox 360. With the new price cuts on the game console, Microsoft could start to lose money in that operation again. In the last fiscal year, the company made $426 million in "devices" on $8.1 million in revenue. But the two years before that, the hardware business at Microsoft lost over $2.5 billion.
Cutting prices on the Xbox will probably set back Microsoft's effort to be profitable by selling games and portable music players. Why not kill the Zune and tell shareholders the focus will be Xbox? No reason to have both products in the red.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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