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Microsoft Sees Zune Sales Topping 1 Million by June

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SEATTLE (Reuters)—Microsoft Corp. forecast on Wednesday that sales of its Zune music player will exceed one million units by the end of June 2007 despite a tepid start for the device.

Earlier this week, a report from market research firm NPD Group showed that Zune's share of the U.S. digital music player market fell to 2 percent and fifth place in the week ended November 25, the second week of sales since its release.

Zune was second with a 9 percent market share in the first week after launch.

"While this is expected, our focus is less on week over week numbers, and more on the incremental sales that are leading to overall growth of the category," said a Microsoft spokeswoman in a statement.

Microsoft, which had never announced a forecast for Zune sales, said it is now on a path to sell more than one million units by June 30, the end of its current fiscal year.

The slow start for the 30-gigabyte Zune underscores the huge challenge Microsoft faces in trying to crack into the digital music player market, dominated by Apple Computer Inc.'s iPod.

Apple has sold more than 70 million iPods since its introduction in October 2001 and the iPod commands more than a 70 percent share of the U.S. market for MP3 players, as they are also known.

The Zune, shaped like a pack of playing cards and selling for $249, comes with wireless technology that allows users to beam photos and songs to one another.

Microsoft has said it plans to invest hundreds of millions of dollars to develop and market the Zune, while acknowledging that the investment may take years to bear fruit.

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