Zune Music Player Nears 1 Million Sales

By Mike Musgrove
Washington Post Staff Writer
Wednesday, May 30, 2007

Microsoft says it is on track to sell its millionth Zune music player, the software company's would-be challenger to Apple's enormously popular iPod.

Microsoft expects the player to hit the sales milestone by the end of its fiscal year in June, almost eight months after the product made its debut. Apple, which launched its iPod music player in October 2001, has sold 100 million of the music players.

Several competing music devices from hardware makers have aimed to become "iPod killers," but there has not been much change in the MP3 player market in recent years, even with Microsoft's highly publicized entry.

Apple has long dominated the music-player space with a steady market share of about 70 percent, according to research firm NPD Group. With its new device, Microsoft has grabbed 2.3 percent of the market and is ranked fourth, behind Apple and the technology companies SanDisk, with 11.7 percent, and Creative, with 4 percent.

That is not a big change from the way the market looked before Microsoft introduced its player, said Stephen Baker, an analyst at NPD.

"I haven't seen anything coming out of Microsoft that would change the MP3 player market," he said. "Standing alone as a music player, I think it's just another fly that Apple has swatted off its back."

As the iPod has become an iconic device that has changed the way many people consume music, even large competitors like Microsoft do not tend to enter this market with much swagger.

Jason Reindorp, Microsoft's marketing director for the Zune, took a humble tone in an e-mailed response to a query about unit sales. "The one million unit milestone is just one conservative step of many we'll take over the next few years as we continue to introduce new features and devices and build our brand," he said.

Some analysts said yesterday that Microsoft was hitting this milestone more quickly than expected, even if Apple does not have much to worry about as yet.

"I find it very surprising," Tim Bajarin, president of tech research firm Creative Strategies, said of Microsoft's sales numbers. "But . . . in comparison to Apple's numbers, that's extremely tiny."

Digital music industry analyst Phil Leigh, president of the market research firm Inside Digital Media, agreed that hitting the 1 million mark "doesn't really distinguish them."

Microsoft has tried to make wireless music-sharing a selling point for the Zune to set it apart from other music players. Users are allowed to wirelessly pass temporary copies of songs to other Zune players. After a few days or a few listens to the song, the copied version of the original file is automatically erased.

Microsoft has been aggressively experimenting to see if consumers respond to new colors or specialized versions of the Zune in different markets. This month, Microsoft released a pink Zune player for Mother's Day. Next month, the company plans to release a special version of the player based on its hit video game series Halo. That version of the Zune player, to be sold exclusively at GameStop retail stores, would come loaded with videos, soundtracks, trailers and artwork from the game.

NPD analyst Baker thinks Microsoft should offer more features that leverage its other businesses, such as the Xbox 360, to give the Zune player an advantage.

Microsoft's chairman, Bill Gates, and Apple's chief executive, Steve Jobs, are scheduled to make a rare joint appearance tonight at a tech conference in Carlsbad, Calif., to discuss the future of technology. It is not known if the two plan to discuss music players.

© 2007 The Washington Post Company