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MS spends big on Zune, expects loss

updated 06:55 pm EDT, Thu July 27, 2006

Zune is long-term

A Microsoft executive today said that the software giant's recently announced Zune player will result in one product this year, but will cost "hundreds of millions of dollars" in research development. The company expects to lose money in the near-term as it builds out its services and debuts new, innovative devices. Microsoft will start by selling the "Zune" player this year, expanding on that launch with a new product line by the next calendar year, "as well as broadening the product lines over time," according to the Wall Street Journal. Microsoft last week confirmed that it is in fact developing a portable media player to compete with Apple's market leading iPod, possibly to the chagrin of various Microsoft partners. [updated]

Analysts said they expect Apple to counter Microsoft's new product with new features and more innovation, but the Microsoft executive stressed that Zune is a long-term gamble, adding that it will take time to achieve.

"This is something that is going to be a three-, four-, five-year investment," Bach said.

Apple currently leads the market with its iPod portable media players and its iTunes Music Store. Apple in February announced that it had sold its one billionth song via the iTunes Music Store, and later announced that it had sold one million videos just 20 days after unveiling video download content to consumers.




by MacNN Staff

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  1. porieux

    Joined: Dec 1969

    0

    ahem

    >>> A Microsoft executive today said that the software giant's recently announced Zune player will result in one product this year, but will lose "hundreds of millions of dollars" in future years.

  1. porieux

    Joined: Dec 1969

    0

    ahem

    ^ fixed

  1. Paul Huang

    Joined: Dec 1969

    0

    Complete the sentence.

    long-term failure

  1. bsnoel

    Joined: Dec 1969

    0

    I can't wait

    I am looking forward to their product entering the marketplace . I have always dreamed of owning a poorly engineered MP3 player, that is highly vulnerable to attack and randomly locks up. If we are lucky it will have a really clunky user interface and lots of stupid error messages too. I think that WiFi is an especially great idea. With WiFi, my MP3 players battery life will probably be less than an hour, unless I buy the optional battery pack that weighs 2 lb.. It will be fun to go jogging with a 2+ pound MP3 player strapped on. I cannot wait to see what other fun innovations Microsoft might come up with. Anti-spyware for MP3 perhaps? Who knows, the possibilities are endless.

  1. kw99

    Joined: Dec 1969

    0

    Typical MS strategy

    A strategy that only Microsoft can afford. But maybe not for very long...

  1. ggirton

    Joined: Dec 1969

    0

    had better be long term

    It had better be long term since it's not even going to appear for six more months. During which time we'll all have to read more about the MS strategy for Zzzzzzzzzune.

    Why is this story getting any ink? (or pixels?)

  1. HCRefugee

    Joined: Dec 1969

    0

    100s of millions of $$$

    "This is something that is going to be a three-, four-, five-year investment," Bach said.

    Oh, I see, kind of like Vista...off in the distance...way off...

  1. phillymjs

    Joined: Dec 1969

    0

    Wow

    "...the software giant's recently announced Zune player will result in one product this year, but will cost "hundreds of millions of dollars" in research development."

    That's incredibly expensive. Imagine how much it would have cost if they actually had to create it from scratch, instead of just copying the iPod and iTunes and then tacking on a few extra features to try to appear innovative.

    On another note, I just love how they're s******* their partners on the PlaysForSure thing-- that is hilarious. Really gotta hand it to Microsoft: compete with them at your own peril, or partner with them at your own peril. That kind of choice ranks up there with deciding where to take the first bite of a dog c*** sandwich. :-)

    ~Philly

  1. JRox

    Joined: Dec 1969

    0

    Here we go again...

    Oh its gonna take them a long time alright..but they wont get it right anyway. I can see it now.... Comes integrated with Popup Explor..I mean Internet Explorer and "Norton's Antivirus Zune Edition. Then comes the Zune security updates, patches, and Zune SP1, SP2,.....

  1. FastAMX79

    Joined: Dec 1969

    0

    wow

    gotta love thier business model. s**** your partners, sell at a complete loss to drive your competition out of the picture, and sell a product what will have the bsod just like their OS! the first mp3 player to be messed up with virii and spyware.

    i personally think M$ should have used that money to... i don't know... maybe fix vista?? it seems they have no direction. they are more worried about trying to crack a market they have no idea about than trying to release software.

    Gates must be proud!!

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