Microsoft's Zune has been dropped by the GameStop videogame retailer.
GameStop has hundreds of stores across the country and losing that distribution channel could hurt Zune sales. Many of GameStop's customers are avid users of Microsoft's Xbox 360 console and could have presented a cross-selling opportunity for Microsoft.
By Penny Gottardi
May 23, 2008 21:16 PM GMT
GameStop said during an earnings call on Friday it will discontinue sales of the Microsoft Zune digital media player citing reasons that the device just wasn't selling enough. Zune was introduced in 2006 and has captured 2.6 percent of the digital media player market dominated by Apple. Since hitting stores, around 2 million Zunes have been sold, in comparison to 80 million iPods. The move is unlikely to affect GameStop, whose sales come almost completely from video games but it puts up another hurdle in Microsoft's attempt to grow Zune sales. "We have decided to exit the Zune category because it just did not have the appeal we had anticipated," said a GameStop spokesperson.
In response to the announcement, Microsoft said Friday that the Zune continues to be carried by other big-box retailers. "We have a set of great partnerships that give Zune a strong presence at retail including Best Buy, Target, Wal-Mart and others," said Adam Sohn, director of marketing for Zune. The decision to stop selling Zunes took a toll on the company's margins in the first quarter. Gross margins for the quarter were 26.1%, down from 27.2% he same quarter year before, reported GameStop on Thursday. Shares of GameStop were down $3.15, or 6.2%, to $47.72 following in-line guidance for the current quarter and fiscal year.
|
