Zune Thoughts: Zune Revenue Plummets

“Microsoft's newly-announced layoffs and declining profits aren't the only bad news in Redmond -- according to the company's quarterly statements, Zune platform revenue decreased $100 million, or 54 percent compared to the same quarter last year, due to falling device sales. Mega-ouch. Not all is doom and gloom for the Entertainment and Devices Division, which continues to be profitable with a $151m haul: Xbox 360 and PC platform revenue increased six percent to $135 million. Meanwhile, Apple saw a three percent increase in iPod sales over the same period, so we're anxious to see what Microsoft has planned for reviving the social.” (via Engadget)

Can anyone say ‘ouch’? Year over year decline in revenue of over half is terrible news. Now I realize we’re the midst of a recession but that still doesn’t soften a blow like that to a division that needs to show some progress. I’m fairly confident the Zune won’t be going anywhere anytime soon at least. I believe its too important to Microsoft’s entertainment strategy in the long term. It does need to be relevant, however. It may be time that Microsoft looks at its Zune strategy and decide if it’s time to change anything.

I think that if Microsoft could get some very tight integration with Zune and its Windows Mobile 7 platform they could have a real winner. But it has to be great. Windows Mobile is in so many hands right now that tying the Zune to that platform would be a powerful selling point for both WinMo and Zune. I’ve recently moved to Android but if WinMo 7 were to be Zune-capable then they could very well get me back.