Thursday, July 27,2006 @ 6:55pm
MS spends big on Zune, expects loss
A Microsoft executive today said that the software giant's recently announced Zune player will result in one product this year, but will cost "hundreds of millions of dollars" in research development. The company expects to lose money in the near-term as it builds out its services and debuts new, innovative devices. Microsoft will start by selling the "Zune" player this year, expanding on that launch with a new product line by the next calendar year, "as well as broadening the product lines over time," according to the Wall Street Journal. Microsoft last week confirmed that it is in fact developing a portable media player to compete with Apple's market leading iPod, possibly to the chagrin of various Microsoft partners. [updated]
Analysts said they expect Apple to counter Microsoft's new product with new features and more innovation, but the Microsoft executive stressed that Zune is a long-term gamble, adding that it will take time to achieve.
"This is something that is going to be a three-, four-, five-year investment," Bach said.
Apple currently leads the market with its iPod portable media players and its iTunes Music Store. Apple in February announced that it had sold its one billionth song via the iTunes Music Store, and later announced that it had sold one million videos just 20 days after unveiling video download content to consumers.