Citing lack of demand, GameStop pulls Zune from store shelves

GameStop says insufficient demand and business considerations are behind its decision to stop selling Microsoft's iPod competitor.

While Microsoft reached its one million units sold goal last June after just over 7 months, sales of the Zune have slowed since. The company only reached the two million sold mark earlier this month.

Microsoft had hoped its new revamped Zune, which added a smaller flash memory model and a sleeker design, would turn things around. However, buyers are still flocking to the iPod and Microsoft's share of the market is only around four percent.

The only company that has seen any negative effect from the Zune's introduction is Creative, which has fallen to control just two percent of the market. SanDisk remains the second place audio player manufacturer at 11 percent behind Apple.

GameStop has stood behind Microsoft in offering the Zune to its customers since its release in November 2006. But the retailer said demand is nowhere near what it had anticipated, and would sell its remaining inventory before cutting the cord.

While GameStop's move may not affect Zune by a noticeable amount since the retailer focuses primarily on gaming, it indicates that patience with Microsoft in its efforts to attempt to compete with Apple may be wearing thin.

Still, Microsoft has made no mistake about its continued support for Zune. The company is rumored to be considering a European launch for the player next year, and the addition of video downloads and content sharing with the new Zune Card that come with software revision 2.5 show ongoing, if incremental, improvements.