Alphabetically or otherwise, on Microsoft's (Nasdaq: MSFT) list of priorities, Zune seems to be dead last.
"Over the past few days, more and more Microsoft watchers are noticing that Microsoft execs seem to be making a deliberate effort to avoid using the Z (Zune) word," wrote ZDNet's Mary-Jo Foley in her All About Microsoft blog.
Foley and others have noticed the Zune brand's noticeable absence when Microsoft discussed its many offerings in light of its poorly received mobile deal with Nokia (NYSE: NOK).
Is Microsoft killing the Zune? Is it in the rebranding process? Are reports of its demise greatly exaggerated? In response to such questions, Microsoft posted this on the Zune's official Facebook page last night:
Zune Nation, let us give it to you straight: We’re not 'killing' any of the Zune services/features in any way. Microsoft remains committed to providing a great music and video experience from Zune on platforms such as Xbox LIVE, Windows-based PCs, Zune devices and Windows Phone 7, as well as integration with Bing and MSN.
Then again, maybe Microsoft shouldn't be drawing attention to its Facebook page. For starters, it only has roughly 144,000 fans. Compare that to the nearly 9 million Facebook fans for Apple's (Nasdaq: AAPL) iPod.
Making matters worse, many of the "fans" posting on the page appear to either be complaining about the lack of apps or having problems with their devices.
Sole survivor
If Microsoft hasn't killed the Zune by yet, it ought to be safe, right? Mr. Softy had no problem nixing the Kin last year after a mere handful of weeks on the market. Obviously, the company can swallow its pride in the face of technological defeat.
Microsoft could have euthanized the Zune when GameStop (NYSE: GME) -- a true haven for Microsoft fans, given the gobs of Xbox games it sells -- pulled Microsoft's portable media players from its stores three years ago. It didn't.
Instead, Microsoft has thrown marketing dollars at the device and its Zune Pass music subscriptions service. Not lately, mind you -- but it did happen.
Late last year, Microsoft stocked UAL's (NYSE: UAL) longest international flights on United Airlines with hundreds of Zune HD players. This globally ambassadorial move came just a few months after the airline's in-flight audio switched over to 21 channels of Zune-branded music offerings.
A company doesn't go out of its way to keep the Zune brand alive for the sake of dumping stale inventory on a legacy carrier. The UAL move came after the Kin was canned, so it was clearly a conscious decision to keep going from a humbled company.
It's all about pie
The Zune scene has sounded relatively quiet since the Zune HD hit the market two years ago, but perhaps we're just not listening.
At its peak a few years ago, sales tracker NPD Group pegged Zune's market share as high as 4%. An NPD Group analyst estimated Zune's share of the market at a mere 1% less than a year ago.
A shrinking slice of a growing pie isn't fatal -- unless the pie itself is also becoming smaller. Apple's iPod, which still commands more than three-quarters of the digital-music-player market, posted a 7% year-over-year unit decline last fiscal year.
Apple's not crying nano-sized tears over this. The iGiant more than makes up for the iPod's gradual slide through a surge of iPhone and iPad gadgets that feed into the same iTunes ecosystem.
Microsoft isn't so lucky. It's playing from behind in mobile and tablet computing. Why keep the Zune going?
Does anybody care? Does anyone know if the Zune is really dead or alive? This gizmo is the Abe Vigoda of portable media players.
Functionally, the Zune's no dud. Fellow Fool Seth Jayson raves about his Zune, and I'm sure that the other three of you out there who still own one feel equally as passionate. However, the gadget's just not relevant. It never made a dent in Apple's business, nor even left much of a mark on distant silver medalist SanDisk (Nasdaq: SNDK) in portable media players. At this point, the brand may be a bigger liability than anything else.
Instead of trying to rebrand its Xbox Live digital video service under the Zune label, the way Mr. Softy did two years ago, maybe it's time to either ditch the gadgetry push, or reposition those efforts under the more successful Xbox brand.
Let Xbox be the last of Microsoft's priorities alphabetically. It's about time.
Is the Zune brand an asset or a liability for Microsoft? Share your thoughts in the comment box below.
