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Analyst: Microsoft Should Abandon Zune

IDC analyst Susan Kevorkian recently told Market Watch that Microsoft should abandon Zune altogether and focus the company's attention on the high-growth smartphone sector. The comment is derived from a general consensus by analysts that Microsoft's portable media player missed its mark, and doesn't look to gain any ground in its battle against Apple's iPhone and iPod Touch anytime soon.

"If Zune were going to make a strong move against the iPod, it already would have," Kevorkian said.

According to Microsoft's quarterly earnings report last week, revenue for the non-gaming side of Microsoft's Entertainment and Devices unit fell 42-percent to roughly $211 million for the fourth fiscal quarter ended in June. In comparison, Apple experienced a decline in the same time period as well, with a 11-percent decline in sales that estimated 1.5 billion.

However, despite recent numbers, Microsoft is betting on the September release of its upcoming Zune HD that utilizes Nvidia's Tegra CPU, allowing the portable media player to present 720p video. George Kurian, a vice president at Tradition Capital Management LLC, which owns Microsoft shares, doesn't seem too optimistic.

"The market reception for Zune is so disappointing that many retailers have even stopped selling it altogether," he said.