Zune will still hit 1M Target- Microsoft

After experiencing a slump in its sales for the last couple of weeks, Microsoft is still confident that they will sell 1 million of their portable media player Zune by the middle of 2007.

At its launch, Zune ranked number 2 but was soon displaced when Sansa cut back its prices. Now, Zune is ranked number 5. It is trailing behind Memorex, Creative, SanDisk's Sansa and Apple’s iPod. The sales data was compiled by NPD from retailers like Best Buy and Circuit City.

"In terms of building customer awareness and getting retail presence, it was a good launch," Ross Rubin, an analyst with NPD.

Bryan Lee, corporate vice president of Microsoft's entertainment group, said “Apple is the market leader. We didn't expect to beat them this holiday, but we wanted to be relevant and we wanted a chance to grow. I think we are on plan.”

Zune features a 30GB memory capacity, wi-fi capability, larger screens and built-in FM radio. It can also transfer songs to another Zune using a wireless technology feature. Zune is priced at $249.99.

Unlike its rival iPod, the Zune media player weighs heavier, lacks podcast support and has shorter battery life; possible reasons for its sliding sales performance.

Apple Computer Inc’s iPod is enjoying a 75 percent market share and has already sold 65 million units on the end of its fiscal year which was last September. It just recently released new versions of its iPod Shuffle and iPod Nano.

"It doesn't have anywhere near the cachet and cool factor that Apple has. Microsoft has a very difficult road ahead of them, given the amount of competition in the MP3 player field", said Tim Bajarin of Creative Strategies.

Researchers have reported on the growing market of MP3 players in the US. A whopping $1.5 billion in 2005 to $10.7 billion by 2010 is the expected revenue for the online music market.