Zune… The Death of a Dying Brand (MSFT, SNE, AAPL, AMZN)

How did Microsoft Corporation (NASDAQ: MSFT) miss the mark so badly in digital music?  How did Sony Corporation (NYSE: SNE) allow the great brand of the Walkman get over-run?  The world of digital music has been taken over by Apple Inc. (NASDAQ: AAPL), and now Microsoft is formally bowing out of the war on the digital music front.  Microsoft is killing the Zune.

Here is what is almost laughable.  Microsoft is not adding further effort into the Zune, but it will continue selling the existing model on shelves.  This sounds as if it is nothing more than a ploy to avoid having to take models back from retailers.  It is not as if the move will matter in the sector.  Everyone already bought iPods anyway. 

Steve Ballmer had once indicated that it was possible that Zune could take over the culture around the iPod in popularity.  Well, how about that?

It looks now as if Microsoft’s only hope of derailing Apple in online music is to run ads about how listening to music with headphones can cause severe harm.  We all know that won’t work either.

Yours truly was one of the first adopters of the Zune but became frustrated with updates that changed music rights for many play-list songs.  Apple is supposed to have more than three-quarters of the MP3 market and Zune was supposed to be somewhere around a whopping two-percent at our most recent point.  Life goes on, just not with Zune.  Maybe the brand name can live within the Windows-based smartphone ecosystem, if that ever takes off.

There is one other possible ‘food for thought’ item here that investors should consider.  It seems as though nothing is going to derail Apple in online media.  If this is just one less player on the market and just one more dominating point for Apple, where does this leave Amazon.com Inc. (NASDAQ: AMZN)?  Sure, Microsoft had little to do and made little contribution on this front.  This just represents one more up-sell opportunity for Steve Jobs and friends.

JON C. OGG