Zune struggles to find the right pitch | Beyond Binary - A blog by Ina Fried - CNET News.com

After a decent freshman year, the Zune appears to be having a bit of a sophomore slump.

In its first year on the market, Microsoft shipped 1.2 million Zunes, reaching about 3 percent of the U.S. market for MP3 players by the first quarter of 2007. A year later, the company’s market share stands at about 4 percent, but that slight gain comes as Microsoft has expanded from one hard-drive model into a family of products that includes both flash-based and hard drive-based units.

As part of its announcement of a Zune video store this week, Microsoft noted that it has now sold more than 2 million Zunes. That would appear to show that business is not growing much despite the expansion of the product line. (And, to get a sense of where the competition is, Apple sold more than 10 million iPods in just the non-holiday January to March quarter).

For their part, Microsoft Zune officials say they’re pleased with where things stand, reiterating that they see their effort to form a serious rival to the iPod as a years-long project.

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