Microsoft (MSFT) recently initiated the first company-wide layoffs in its history, with 1,400 employees let go and an eye towards 5,000 position reductions within 18 months. So with Microsoft scrutinizing itself so deeply, perhaps the company can finally admit it’s time to shutter the Zune.
Not the least because the Zune is doing even worse than we thought: Microsoft’s quarterly filings reveal Zune sales plunged 54% year-over-year last holiday season, all the while Apple (AAPL) is selling more iPods than ever before. And selling the Zune is going to be even harder going forwards: The high-profile failure of Zune 30GB models on New Year’s Eve due to a Y2K-like bug is only going to spook consumers more.
We understand why Microsoft has insisted until they’re blue in the face they’re “deeply committed” to the Zune: Microsoft (wisely) realised no one would buy a Zune if they seemed ambivalent towards their own device.
But in light of the most recent numbers — and Microsoft’s self-professed desire to cut costs — there’s no point left in pretending the Zune’s not a failure. Time for Microsoft to cut its losses and move on.