Microsoft shipped its one millionth Zune MP3 player after nine months on the market according to Robbie Bach, president of Microsoft's Entertainment and Devices Division. The company had originally expected to top the one million mark in June, but the company achieved the feat a month early.

"We're very pleased with the progress. We've sold a little over a million Zunes. In the category we're in, the hard-disk-based category, we've got about 10 percent market share," said Bach. "It's a good start. It's not an overwhelming start. I'm not going to pretend it's some gigantic move."

Even though Microsoft shipped over a million Zunes, it's still well behind segment leader Apple which recently celebrated its 100 millionth iPod sold after nearly six years on the market. As of February 2007, the iPod commanded 73.7 percent of the MP3 player market. Microsoft's 2.4 percent share was good enough for fourth place behind SanDisk and Creative Labs.

Microsoft is expecting a rather large uptick in sales leading up to the 2007 holiday season. The company is building a new manufacturing plant in China which will produce a second-generation HDD-based Zune along with a flash-based Zune.

In the mean time, Microsoft is likely to add firmware updates to existing Zunes to further enhance their capabilities. New MP3 player entries on the market such as SanDisk's Sansa Connect offer wireless downloading functionality that many assumed the Zune would feature from the start.

"As to the Wi-Fi, we think the idea of these devices being connected where you want them connected is very important. That's why we shipped the original Zune with Wi-Fi built in, remarked Bach. "The cool thing about that is, the innovation can all be in software. Wi-Fi is an important area. We'll see how that SanDisk project does."