Microsoft On Track to Sell 1 Million Zunes

In a newspaper interview over the weekend, Microsoft President Robbie Bach said that the company had sold just over one million Zune devices, beating the company's publicly-stated sales predictions by one month. However, it turns out Bach was misquoted: Microsoft still plans to sell one million Zunes by the end of its fiscal year, which happens on June 30. The company had previously promised to sell one million units by that date.

"We've sold a little over a million Zunes," Bach reportedly told "The San Francisco Chronicle." "In the category we're in, the hard-disk-based category, we've got about 10 percent market share. It's a good start. It's not an overwhelming start. I'm not going to pretend it's some gigantic move." However, it's not clear Bach ever told the publication that. In the podcast-based transcript of this conversation, Bach says, "When we finish our fiscal year in June we'll have sold a little over a million Zunes, so we feel very good about that."

Microsoft has been steadily chronicling its meager successes in the portable digital media player market since the Zune was released in November 2006. After a decent start, the Zune has typically commanded about 9 to 10 percent market share each month, giving it the number two position in the sub-market for MP3 players with hard drives. However, the dominant player, Apple's iPod, accounts for most of the other 90 percent of the market. Indeed, Apple has sold more than 30 million iPods in the last two quarters.

Microsoft, however, has always maintained that its entry into this market would be marked by slow and steady progress because it understands how difficult it is to defeat an entrenched market leader. Going forward, Microsoft will continue to market the Zune's competitive advantages over the iPod--include a nicer and bigger screen, wireless sharing capabilities, and an ever-expanding set of color choices--while introducing new Zune models that will help the product compete better with Apple's entire iPod lineup.

Microsoft also plans updates to the Zune Marketplace, which is analogous to Apple's iTunes Store. Bach called the attach rate of purchased songs to Zunes "pretty typical," and said that the company will expand the Zune Marketplace in the future to include features that help people connect with one another. He also hinted at coming "innovation" for Zune's wireless feature, which is currently limited to Zune-to-Zune content sharing. Zune users have wondered when the feature might be updated to allow for song purchases from the device, without the need for a connected PC.

UPDATE: This article has been updated to reflect the fact that Bach's recorded comments do not correspond to the quote originally provided by the San Francisco Chronicle.

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