Microsoft: The Zune Goes To China

Microsoft (MSFT) wants more control of making the Zune, so it is putting up a factory in China, of all places. Perhaps labor costs are low there.

The Zune multimedia player has not sold very well. The Apple (AAPL) iPod continues to beat it up and take its lunch money. As MarketWatch points out: "Microsoft has said it expects to sell more than 1 million Zune players by the end of the company’s fiscal year in June. By contrast, Apple shipped 10.5 million iPods in the March quarter alone."

The factory will make a new version of the Zune, perhaps called Zune 2.0. The new incarnation will be thinner and have Flash-based hardware. 

Microsoft was able to take a huge amount of share from the Sony Playstation and it took many years. Working over the iPod may prove harder.

Douglas A. McIntyre