Microsoft has announced that they are splitting the Zune mp3 player team in two in a move to decrease costs and improve performance within the division.

While the move was decided upon on Jan. 22, 2008 as a part of a larger shakeup which included the first companywide layoffs that Microsoft had ever made, it was not really explained until yesterday. That was when Enrique Rodriguez, the vice president who runs the Mediaroom and Media Center TV divisions, provided an interview to CNET news.

The basic personnel change places most of the software and services people from the Zune team on Rodriguez’s staff. That represents by far the majority of the employees. The hardware members will now report to Tom Gibbons, who also manages the design efforts within Microsoft’s Windows Mobile unit. Rodriguez said, “We’re just being very pragmatic and even more so in a world in which not even Microsoft can afford to over-invest.”

Rodriguez also tried to make it clear that the move was not made because of Zune sales performance. The Zune sold twice as well during the holiday season in 2007 than it did in 2008. Microsoft, Rodriguez said, was simply tying to unify its entertainment business assets and preparing to offer the Zune services on more than just the single Microsoft device.

In part, Rodriguez said, “The goal is to make non-gaming entertainment a first-class citizen within Microsoft’s business. That means building better software and gaining scale a little further out than just in Redmond. The other thing we are trying to do, like any other business, is to make some money.” That last sentence highlights a problem area for the Zune.

The Zune device itself is still important, according to the new boss. He said, “You have to have a hero device. If you ask me how important is it from a numbers perspective, today it’s ultra-important. If I do my job right, part of my job is to make it less important. Part of my job is to make sure the service comes into every device. The reality is that will continue to be the one vertical device that we control every…aspect of it all the way to what it says on the box. So shame on us if it is not the best.”

It sounds like a large and difficult job has been placed on Rodriguez’s plate. The Zune has not been recently competitive, either in hardware or service sales. Turning that trend around may require a heroic effort on the part of the new team leader as well as a “hero device.”

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Entry was posted on Friday, February 13th, 2009 at 5:00 pm under Media players, Microsoft.

Read more entries by Michael W. Jones.
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