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Microsoft to Pull Zune?

Zune sales couldn’t keep up with Apple iPhone, says NPD Group

Microsoft reportedly is set to abandon its Zune MP3 player due to poor demand, as consumers turned to Apple’s iPod and smartphones that can play music as well as perform other functions.

That’s compared to the Apple iPod, which always dominated the MP3 player market, according to the NPD Group, which pegged Apple as garnering 77% of the portable music player market last year.

Microsoft first introduced the Zune in 2006. Analog FM is included on all Zunes and the company introduced a model that included HD Radio in 2009. An Ars Technica report in Wired states that “the Zune HD was a well-received, well-designed and supremely elegant device, but was a case of too little, too late. It was competing against Apple’s iPod touch, with its enormous App Store advantage.”

We’ve reported HD Radio developer iBiquity Digital has been in talks with Apple over inclusion of its technology in Apple products like its iPhone. The company told Radio World recently those talks continue.

Bloomberg cites sources familiar with the situation that say Microsoft reportedly will continue to support existing Zunes but will not release future models once current inventories are depleted. Zune will live on as a software-and-services platform, according to Bloomberg. Windows Phone 7 embeds the Zune player for media playback on the phone, and uses the Zune Marketplace for online music sales and the Zune PC software for media syncing and firmware updates.

Microsoft told InformationWeek the Zune will evolve, and it would share more information on Zune entertainment service and Zune hardware “as future plans develop.”