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Cue up a weepy ballad for Microsoft
BETH JINKS AND CRAYTON HARRISON; Bloomberg News
Published: May 24th, 2008 01:00 AM
GameStop Corp., the world’s largest video game retailer, will stop carrying Microsoft Corp.’s Zune digital music players in stores, after they failed to sell as well as other products.

GameStop decided internally to stop stocking Zunes about a month ago, spokesman Chris Olivera said Friday. Chief Operating Officer Daniel DeMatteo indicated Thursday on a conference call that GameStop had walked away from the product.

“It didn’t have the same strength as other products, like the video games and consoles that are our core,” Olivera said in an interview. “We don’t sell other music players at all. In the past, we have tested music and other items, but it was not performing at the level that other products had.”

GameStop operates more than 5,000 stores in 16 countries, selling such games as Nintendo Co.’s Super Smash Bros. Brawl and Microsoft’s Xbox 360 console.

Microsoft, the world’s biggest software maker, introduced the Zune about 18 months ago to compete with Apple Inc.’s iPod, which dominates music-player sales in the U.S.

Microsoft fell 42 cents, to $28.05, on Friday. GameStop, based in Grapevine, Texas, climbed 52 cents, to $49.37.

Microsoft has sold more than 2 million Zune devices, including 1 million since it launched new models in November, according to an e-mail from the Redmond-based company. Microsoft also sells the Zune through Wal-Mart Stores Inc., the world’s largest retailer, and Best Buy Co.

“We will continue to invest in deep retail partnerships, and have seen good momentum online and at retail over the last few months,” Microsoft spokesman Adam Sohn said in an e-mail. “We’re looking forward to a continued strong presence at retail with our partners.”

Apple’s iPod accounted for more than two-thirds of the music players sold last year in the U.S., according to the NPD Group in Port Washington, New York. Microsoft had about 3 percent of the market.


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