Microsoft to ditch Zune?

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With Microsoft currently in the middle of

a wide-scale reorganisation

following a less than perfect

financial posting

, the future of the firm's iPod-rivalling MP3 player Zune has been thrown into doubt, Silicon Alley Insider speculates.

The firm's financials revealed that sales of the MP3 player were down 54 per cent year-on-year for the final quarter of 2008 – a plunge that coincides with Apple's strongest ever iPod sales period.

Zune has struggled to assert its position in the marketplace, and despite total sales of three million since 2006 and Microsoft's insistence that it's committed to the device, its failure to release the device outside of North America has always raised eyebrows. It certainly seems as if Zune is not destined to be the portable Xbox many believed it to be upon its unveiling nearly three years ago.

The Zune encountered PR problems earlier this month after the 30GB version suffered an embarrassing ‘Millennium Bug' type failure earlier in the month, caused by the software's inability to deal with 2008's leap year.

MCV has contacted Microsoft for clarification.