Zune opens at No. 2 in portable media players

Wednesday, November 29, 2006 · Last updated 11:37 a.m. PT

Microsoft Corp.'s Zune music player debuted at No. 2 among portable digital media players, well behind Apple Computer Inc.'s dominant iPod, but edging out previous second-place holder SanDisk Corp., according to data released by the NPD Group Wednesday.

Zune won 9 percent of the U.S. market, measured by unit sales, and 13 percent of the dollar volume for the week ended Nov. 18, the market research firm reported. The numbers reflect Zune's first few days on the market. Microsoft released the device Nov. 14.

The iPod represented 63 percent of unit sales and 72.5 percent of dollar volume.

There have been signs that Zune's market share may have slipped since those initial days. One widely cited indication: The player debuted in the top 10 among Amazon.com's best-selling MP3 players but has since fallen lower in the rankings. As of Wednesday morning, the top-selling black Zune was at No. 17 on the Amazon list.

Nonetheless, the early numbers show a "successful launch week" for Zune, said Ross Rubin, NPD's director of industry analysis, in a news release.

"This was especially impressive given the Zune's single capacity configuration and relatively high price point," Rubin said. "However, Apple still retained dominant share during the week and Zune was still outsold by PlaysForSure-compatible players in aggregate."

Those PlaysForSure devices are part of a previously launched Microsoft initiative that involves making a variety of different devices work with numerous online music services, attempting to give consumers more choice. Participants in that initiative include Seattle RealNetworks, which is also partnering with SanDisk to market a line of Sansa portable players designed to work with its Rhapsody music service.

So far, the PlaysForSure approach hasn't been effective in taking market share from the iPod, leading Microsoft to launch the Zune device, which has its own online music store and service and isn't designed to work with the PlaysForSure initiative.

Microsoft is seeking to differentiate the Zune with features including wireless song-sharing and a larger screen. Initial product reviews have been largely negative, but the company says it plans to upgrade and expand the product line..

Todd Bishop can be reached at 206-448-8221 or toddbishop@seattlepi.com.

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