Zune Executive to Leave Microsoft

Microsoft chairman Bill Gates gestures as he addresses French businessmen during a meeting as part of the Paris Entrepreneurs Show, in Paris Thursday Feb. 1, 2007. Bill Gates is also in France to launch the new Vista operating system.(AP Photo/Remy de la Mauviniere) (Remy De La Mauviniere - AP)

REDMOND, Wash. -- A Microsoft Corp. executive responsible for its newly launched Zune digital music player will leave the company.

The software maker said the departure of Bryan Lee, a corporate vice president in Microsoft's Entertainment and Devices division, was for personal reasons and "absolutely not" related to sales of the music player, which came out in mid-November to soft reviews.

Zune still lags far behind Apple Inc.'s iPod in the United States. Microsoft's device captured about 10 percent of the U.S. market for hard-drive-based MP3 players in December, while 85 percent of the market went to iPod, according to research firm NPD Group.

Microsoft has said it expects to sell 1 million units in fiscal year that ends June 30.

Lee, 43, led business development and marketing efforts for the Zune, while J Allard, another corporate vice president, oversaw design and development. Allard will assume Lee's Zune-related duties, after a transition period of several weeks, Microsoft said.

Lee was hired in 2000 to work on business development for the Xbox video game console and served as the first chief financial officer for the Entertainment and Devices division.

Lee "felt there was never a great time" to leave Microsoft, but that "after reaching this milestone, he's going to leave the company and pursue other things at this time," said Molly O'Donnell, a spokeswoman for the division.

Lee also oversaw Microsoft's eHome group, which handles Windows Media Center Edition and the company's television efforts. Those teams will now report to Robbie Bach, Entertainment and Devices Division president.

Van Baker, an industry analyst with Gartner Inc., saw Microsoft's announcement Wednesday as "clearly a sign of trouble in Zune-land. It had an acceptable launch week, but then it immediately slowed down."

But NPD Group analyst Stephen Baker said Thursday he didn't believe Microsoft watchers should read too much into the move, because Bach and Allard remain in place.

Lee had a role in Microsoft's unusual agreement to share a reported $1 of the $250 purchase price of each Zune device with Vivendi SA's Universal Music Group, a move intended to help Microsoft to build relations with major recording labels.

Even so, content owners have been loath to cooperate with Microsoft by easing the digital restrictions on music tracks, said Rob Helm, research director at Directions on Microsoft in Kirkland.

"It's a hard job," Helm said. "It's not something any other company has managed to do, either."

Microsoft has acknowledged that some songs are unavailable for sharing through wireless song-swapping, a key feature by which the company has tried to distinguish the Zune from the iPod. Microsoft has said that's because the technology is in an early stage rather than because recording labels have blocked certain tracks from sharing.