Microsoft lays an egg with Zune

We’re doing our “told you so, told you so” dance! Microsoft Corp. gave its first sales forecast for its Zune music player Wednesday and said results so far have met its expectations, despite data showing the device slipping in the industry rankings since its debut.

The company said sales of Zune should exceed 1 million units for the current fiscal year, ending June 30. That would put Microsoft far behind Apple Computer, which sold 31 million iPods in the same period in 2005 and 2006. Sales of the iPod have grown steadily.

But Bryan Lee, a Microsoft vice president, said Zune sales so far are "pretty much spot on" with what the company expected internally prior to the Nov. 14 launch. He declined to give specific numbers.

Microsoft executives said previously that their intent wasn't to topple the iPod this holiday season but rather to start an initiative that could be competitive long term. The disclosure of the forecast follows a report Monday from the market-research firm NPD Group indicating that sales of Zune fell to fifth place among portable music players in its second week.

"It's great to have all these iPod killer conversations, (but) we didn't expect to beat them in terms of any sales this holiday," Microsoft's Lee said. "Our goal was to get out, get in the market that really they've defined, to their credit, and become relevant, and then go from there." (Yeah,, sure you didn’t expect to beat Apple. Sure.)

http://seattlepi.nwsource.com/business/294973_msftzune07.html