Analysts believe Microsoft should drop Zune...
Microsoft Corp.'s quarterly earnings report last week featured a number of grim statistics, including a relatively overlooked, albeit steep decline related to its Zune portable media player -- potentially adding more uncertainty to the embattled product's future.
Designed to rival Apple Inc.'s iPod, Microsoft's (MSFT) Zune first appeared in late 2006, but has struggled to chip away at the iPod's dominance. While Apple has morphed the iPod since its 2001 debut into a range of models including the iPod touch and iPhone, Microsoft has so far limited the Zune to a few different devices distinguished only by size and storage capacity.
"If Zune were going to make a strong move against the iPod, it already would have," said IDC analyst Susan Kevorkian.
To be sure, the Zune provides a tiny, and apparently deteriorating portion of Microsoft's business. Revenue for the non-gaming side of Microsoft's Entertainment and Devices unit, which includes the Zune, tumbled 42% to roughly $211 million for the fourth fiscal quarter ended in June - or about 2% of the software giant's total, according to regulatory filings.