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Microsoft Zune with Altec Lansing M604 Speaker Dock
Microsoft is cautiously optimistic with Zune sales figures

Although the Zune has cooled off a bit in sales since its November 14 debut, Microsoft still expects to have shipped more than 1 million units within its first seven months of availability. The expectations are pretty modest on the part of Microsoft and could reflect some trepidation over what Apple has in store for the first half of 2007.

"We're forecasting just over 1 million units for the fiscal year. We feel pretty good about that number," said Zune marketing director Jason Reindorp.

The Zune launched with quite a bang (for a new player on the market with little to no brand recognition) managing to capture 9% of the market during its first week on the market according to NDP Group. Interest in the Zune has cooled off considerably since its launch as the Zune's market share has dwindled down to 2%.

Research firm IDC is forecasting that 21.5 million hard drive-based music players will be sold in 2006 with the Zune contributing 500,000 units to the figure. Microsoft itself projects that it will have 10% to 15% of the 30GB or larger music player market by June of 2007.

Microsoft also noted that a firmware update is on the way for the Zune. The new firmware will include compatibility updates to allow the Zune to function in Windows Vista, general bug fixes and performance tweaks. There will, however, be no additional features included in the update.

So for those of you that were expecting to get expanded WiFi functionality, you will be disappointed...at least for now. "It is plumbing stuff, but it is stuff customers will notice and appreciate. It's not going to be a whole new wireless scenario or anything like that," said Reindorp. CNET reports:

Microsoft also needs to expand how the Zune's Wi-Fi can be used, probably to allow a direct connection for downloading music from Microsoft directly to the Zune. Gartenberg notes, however, that such a connection is tricky to engineer in a way that is still easy to use on a device that has no keyboard.

Microsoft also needs to push out a flash-based player to allow the Zune to gain more traction in the marketplace. According to Jupiter Research analyst Michael Gartenberg, flash-based players like the iPod Nano are unstoppable this holiday season. "There is no flash Zune at a time when the (iPod) Nano is just flying off the shelves. Those are the things they are going to have to address in 2007 if they are going to be a credible player."





"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins
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