There’s bad news for Microsoft in America right now. As their attempt to offer cash to get people to use their Live Search kicks off and the Nintendo Wii catches up with the sales of the Xbox, retailer GameStop have pulled Microsoft’s Zune MP3 player from shelves and their website.

GameStop say they’ll sell the stock they have remaining through their website and then discontinue the MP3 player altogether. The reason for this has been quoted as insufficient demand for the player from customers.

Although GameStop are not one of the major retailers of the Microsoft product, their move to stop selling the MP3 player will make other retailers sit up and take note. A spokesperson for GameStop was quoted as saying that GameStop:

decided to exit the Zune category because it just did not have the appeal we had anticipated.

Just a week ago Microsoft revealed they had sold 2 million of their MP3 players since the launch in 2006, which represents slowed sales as they had managed 1 million sales within the first six months.

Microsoft have failed in comparison with the company who dominates the MP3 player market, Apple, who sold 10.6 million iPods in the first 3 months of 2008, and a phenomenal 22.1 million iPods during the Christmas period.