Microsoft Corporation (NASDAQ:MSFT) has had limited success (an understatement, we’re sure) with its Zune Music brand, and the company has apparently had enough, announcing Thursday that it was pulling the plug on the service. The service was initially brought out as a direct competitor for iTunes and the iPod by Apple Inc. (NASDAQ:AAPL).
Microsoft Corporation (NASDAQ:MSFT) has since pivoted on directly challenging Apple Inc. (NASDAQ;AAPL) in the iTunes mold, instead choosing to focus on its music-streaming service through Xbox. Microsoft announced that the Zune service will be completely shut down by the end this month. The transition had been going on for several months, but Microsoft recently sent a letter saying that by Friday users will not be able to communicate with fellow users, share any playlists or access play history. Also, the Zune Music Pass, which is a subscription service, will not be supported by the correlated desktop application after Friday. This means users cannot make any new purchases (including any HD apps) or re-download any old purchases when the user transitions to a new Windows PC.
However, Microsoft Corporation (NASDAQ:MSFT) did make clear in its letter than the shutdown of Zune as a separate service will not affect the Zune Music Pass that runs through the Xbox 360 console. As for the Xbox Music service, while there is no official word from Microsoft Corporation (NASDAQ:MSFT) , rumors are swirling that this burgeoning service might follow a similar streaming model as other existing services like Spotify and Pandora.
Moving toward the popular Xbox console as the foundation for music streaming just might be just another step to helping Microsoft Corporation (NASDAQ:MSFT) make a larger impress as a prime source for living-room family entertainment. It’s a small step, but it could be important for investors like hedge-fund manager Seth Klarman of Baupost Group, who had $214 million invested in Microsoft at the end of June.