Microsoft: 1 million Zune sales by June 2007

Microsoft is conservatively predicting it will sell 1 million Zune devices by June 2007.

Microsoft has predicted it will sell 1 million Zune devices in its first six months, a figure that would be more than Zune's chief rival iPod sold in its first 14 months but a relatively slow start for the much-hyped MP3 device.

Since its US retail debut on Nov. 15, customer interest in Zune has been lackluster, analysts report, and the company's projections for sales of the device are conservative. By contrast, Apple Computer will likely sell about 25 million iPods over the same period according to financial analysts, though the company only sold 600,000 iPods in the first 14 months of availability.

Mike McGuire, a Gartner research vice president, said he was surprised Microsoft is expecting to sell so few Zunes in the first six months, given that the market for iPod and MP3 devices is thriving. On the other hand, "it's a decent objective," he said.

"I was expecting a more aggressive goal," McGuire said. "But even though it's conservative it's going to be tough [to make that goal]."

McGuire cited the fact that Microsoft is only offering one version of the device and the rapid nature of the media-player market, which is moving forward with new, cutting-edge devices all the time, as challenges for the vendor.

Microsoft's achievements with Zune will depend on how successfully it builds a community around the product with its Zune Marketplace software and online store, as well as how quickly it can upgrade the initial Zune device with new features and models, McGuire said.

Zune is in a distinctly different position than iPod was at its launch. IPods could only be used with Apple's Macintosh computers, which have a significantly smaller market share of the desktop computer market than Windows machines, the platform for Zune. In October 2001, when iPod was released, Apple PC market share was about 2.4 percent. And iPod was an unproved device, one of the first of its kind in a market that Apple ostensibly created, whereas Zune has the benefit of entering a thriving market.

Of course, iTunes software for iPods now runs on millions of Windows PCs in addition to Macs. To date, Apple has sold more than 67 million iPods, and should sell about 82 million by the end of the year. The company has several versions of the iPod -- the video iPod, the iPod nano and the iPod shuffle -- in various sizes and colors. There are also an extensive array of accessories available for iPods.

Microsoft's 30G-byte Zune costs US$249.99, the same price as the video iPod, but it's different from the iPod in two key ways. Zune includes an FM tuner and wireless capability that allows users to share songs between devices.

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Elizabeth Montalbano

IDG News Service

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