MS: We'll Sell 1 Million Zunes by June

Despite sales that lag market-leading Apple by a significant margin, Microsoft continues to put up a brave front in its continuing fight for relevance in the digital music player market.

Microsoft says that it expects to sell about 1 million players by the end of June 2007. While this would likely trail Apple sales by as much as a 25 to 1 margin or more, the company says that would be a great start for its first entrant into the space.

In the holiday quarter alone, analysts expect Microsoft to sell anywhere between 300,000 and 500,000 Zunes. Sales would more than likely taper off rather significantly in the traditionally slow post-holiday quarters.

Although reviews of the Zune have pretty much been universally negative, Microsoft contends that sales continue to perform within expectations. Although the company in its first week managed to snag the number-two spot in sales rankings according to NPD group, it has since fallen to fifth.

Both Microsoft and those associated with the marketing behind Zune say they have had "realistic expectations" of the success of the player. Some have suggested that the media has overplayed the battle between the Zune and the market-leading iPod.

However, Microsoft is just not satisfied with being number two; it believes it will eventually take the lead in the category once it releases new models and begins international sales. Sources have told BetaNews that announcements surrounding future Zunes would come as early as the Consumer Electronic Show in Las Vegas in January.

Regardless of Zune sales this holiday season, it has a lot of ground to make up. Sales this holiday, even in the most optimistic estimates, would pale in comparison to the 14 to 16 million iPods expected to be sold. But analysts warn about reading too much into early sales of the unit.

In related news, the first update to the Zune software is expected to hit before Christmas. Among the improvements are bug fixes, and performance enhancements, along with the addition of Vista support, which the company received some criticism for not including at launch.