A Million Zunes By June?

Still trailing the iPod, Zune still selling better than expected for company, say officials.

Microsoft Corp. said that it expects to sell 1 million of its new Zune music players through the first half of 2007. That figure would pale in comparison to Apple Computer Inc.'s market-leading iPod, but Microsoft contends it would be a good start.

"We think that's actually pretty awesome," said Bryan Lee, corporate vice president for Microsoft's entertainment group.

The $250 Zune, whose 30 gigabyte hard drive can hold 7,500 songs, debuted in mid-November to mixed reviews. One unique aspect of the Zune, its ability to let users wirelessly send songs to each other, has been panned for allowing shared music to be played only three times in three days before expiring.

Microsoft executives have played down any suggestions that the Zune is an attempt to quickly steal enormous chunks of market share from Apple, the Silicon Valley-based rival that says it sold 39 million iPods of various sizes in the 12 months ended Sept. 30. Microsoft has mainly cast the Zune as a first step that would be successful even if it remains a small No. 2 to iPod in the category of higher-end music players.

However, Lee said Wednesday that Microsoft expects to eventually "be the leader" in the category, especially once Microsoft rolls out more models of Zunes and starts selling them internationally. For now Zune is available only in the United States. No overseas sales plans have been disclosed.

If initial sales figures are any indication, the Zune is far from being a blockbuster.

Unit sales in the Zune's first two weeks were roughly the same, according to The NPD Group, which tracks the market. It ranked Zune No. 2 among all MP3 portable music players in its first week of availability, but promotions for rival devices -- including much cheaper players -- during the "Black Friday" week of Thanksgiving had Zune slipping to No. 5.

At on Wednesday, the black Zune was the 55th-best selling item in electronics, well behind competing music players from Apple, SanDisk Corp. and Creative Technology Ltd.

But NPD Group analyst Stephen Baker said it is far too early to draw conclusions about Zune's fate.

"From a purely sales performance, I think it's done fine," Baker said. "I didn't expect it to sell zillions of units out of the gate."

Microsoft shares were down 15 cents at $28.98 in afternoon trading on the Nasdaq Stock Market.


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