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More than a million Zunes to be sold by summer?
Microsoft expects...

By Ina Fried

Published: Thursday 07 December 2006

Although the Zune has fallen a little in the sales ranks, Microsoft says it expects to sell more than one million of the music players by the end of June.

The software behemoth said on Wednesday it is pleased with response to the device, which debuted at number two in research company NPD's weekly sales ranks but fell to number five last week.

Jason Reindorp, marketing director for Zune at Microsoft, said: "We're forecasting just over one million units for the fiscal year. We feel pretty good about that number."

The Zune went on sale in the US in mid-November. In its first days, it ranked near the top of Amazon.com's electronics sales chart. According to NPD's recent ratings, though, it now holds about a two per cent market share.

Reindorp said sales have been going "pretty well" and are "pretty much on track" with the company's initial forecast. "Microsoft has a very realistic view of the landscape," he said. "There wasn't any foolish thought of coming in and turning the whole market around."

IDC analyst Susan Kevorkian said the company's projections are similar to her estimates: "We think that Microsoft had relatively modest expectations in terms of unit shipments and sales going into the Zune launch."

Kevorkian said she expects Microsoft to have sold about half a million of the devices by the end of December. As a point of comparison, research company IDC forecasts there will be 21.5 million hard drive-based music players sold this year, the vast majority from Apple.

Microsoft estimates that its better than one million devices will give the company about a 10 to 15 per cent share of the market for music players with 30GB or more of storage. The company also projects Apple and Zune combined will have 98 per cent of that market.

Beyond the device itself, Microsoft wouldn't say how many music tracks it has sold through the Zune Marketplace or how many paid subscriptions to the Zune Pass music service it has sold. However, Reindorp did say the company has not been heavily promoting the subscription option.

He said: "We're being even more realistic with the Zune Pass. Our numbers are really small."

The company said it is seeing a gap between the number of devices that are being sold at retail and the amount that have been hooked up to a PC and activated.

Reindorp added: "We think a lot of Zunes are sitting underneath Christmas trees."

The biggest surprise, if any, has been the demand for the brown version of the player. Reindorp said: "Some [retailers] are surprised how well brown is doing. Brown is definitely a polarising colour. You either love it or you hate it."

Microsoft is also readying its first software update for the Zune. The update will allow the Zune to work with Windows Vista, Microsoft's just-finished operating system, which is now available to businesses and goes on sale to consumers in January.

The Zune software update, which is expected before Christmas, will fix some minor glitches and add some performance and other improvements, Microsoft said.

Ina Fried writes for CNET News.com