Updated from May 22SAN FRANCISCO -- Video-game retailer GameStop ( GME - Get Report) has decided to stop selling Microsoft's ( MSFT - Get Report) Zune players at its stores due to what it sees as insufficient demand from customers. The move is unlikely to affect GameStop, whose sales come almost completely from video games but it puts up another hurdle in Microsoft's attempt to grow Zune sales. "We have decided to exit the Zune category because it just did not have the appeal we had anticipated," said a GameStop spokesperson. "It (also) did not fit with our product mix." GameStop made the decision about a month ago. GameStop said it will sell Zune players online until it clears out its inventory. GameStop has hundreds of stores across the country and losing that distribution channel could hurt Zune sales. Many of GameStop's customers are avid users of Microsoft's Xbox 360 console and could have presented a cross-selling opportunity for Microsoft. Microsoft said Friday that the Zune continues to be carried by other big-box retailers. "We have a set of great partnerships that give Zune a strong presence at retail including Best Buy ( BBY - Get Report), Target ( TGT - Get Report), Wal-Mart ( WMT - Get Report) and others," said Adam Sohn, director of marketing for Zune, in a statement. "We will continue to invest in retail partnerships and have seen good momentum online and at retail over the last few months." Microsoft has sold about 2 million Zunes since the device's release in Nov. 2006. Zune is estimated to have about 4% of the overall market share for digital media players currently. Zune's total sales are a fraction of those for rival Apple's ( AAPL - Get Report) iPod. Apple sold 10.6 million iPods in the last quarter alone. GameStop first offered Zunes to its customers for pre-orders in Oct 2006. The decision to stop selling Zunes took a toll on the company's margins in the first quarter. Gross margins for the quarter were 26.1%, down from 27.2% the same quarter year before, reported GameStop on Thursday. Shares of GameStop were down $3.15, or 6.2%, to $47.72 following in-line guidance for the current quarter and fiscal year.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Technology
Taiwan Semi's Upbeat Outlook Is Welcome News for Chip Stocks -- Tech Check
At a time when chip stocks have done much to price in a second-half recovery, TSMC avoided doing anything to spoil the fun.
Zoom's CFO Talks to TheStreet About Her Firm's Growth Strategy and More
In a talk with TheStreet that followed her firm's big IPO, CFO Kelly Steckelberg discussed Zoom's long-term opportunities, its investments in AI-related features and its openness to M&A, among other things.
Elon Musk, SEC Seek Extra Time For Settlement Talks
The two parties conferred by phone for "over an hour" this week, but were unable to reach a deal.
Pinterest, Zoom Surge on Debuts, but Can They Avoid Lyft's Fate?
The economics of both firms are attractive, but their valuations are very high, as is typical for tech new issues.
Pinterest and Zoom Are Off to the Races, but Now Comes the Tough Part
The two tech unicorns popped on their first day of trading, but the performance of Lyft since its own initial day of trading serves as a cautionary tale.