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Friday July 31, 2009
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 The last fiscal quarter wasn't kind to Microsoft's iPod killer. The company's non-gaming entertainment group took a 42-percent tumble in that time, a number analysts are chalking up almost entirely to a steep drop in Zune sales.
Said analysts are also largely recommending that the company abandon what has largely been considered a pet project. "If Zune were going to make a strong move against the iPod, it already would have," IDC's Susan Kevorkian told MarketWatch.
Some are suggesting that Microsoft think less iPod and more iPhone, moving ahead. "Microsoft should abandon Zune and follow Apple's strategy to try to make its presence felt in the high-growth smartphone sector," Tradition Capital Management LLC VP George Kurian told the site.
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July 31, 2009 4:26 PM
Interesting - I'm curious how or if the Zune HD will play into this - it's not out yet, but Microsoft is betting a lot on the HD to bring it up to speed in the DAP market and especially to compete with the iPod Touch.
That being said, I can't imagine Microsoft competing in the smartphone space without using Windows Mobile, although frankly a smartphone running a modified version of the OS that the Zune runs would be fabulous and a significant improvement over Windows Mobile.