Microsoft lost approximately $100 million in Zune revenue in its most recent quarter, filings with the Securities and Exchange Commission indicate. The number represents a 54 percent drop versus the same quarter in 2007, and is being attributed to low sales, in spite of the introduction of improved second-generation models. The division responsible for the player, Entertainment and Devices, brought in $151 million, but mainly on the back of PC and Xbox 360 sales.
It is thought that Microsoft may be trying to slowly phase out the Zune, which has always struggled to gain ground versus its main rival, the Apple iPod. CEO Steve Ballmer has de-emphasized the player in interviews, suggesting that its technology may be fused with Windows Mobile. As a part of its recent job cuts, the company is also believed to have taken harsh action in Entertainment and Devices, which may point to diminished support and/or development. [viaEngadget]