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Microsoft Takes Early MP3 Silver

Katie Dean

New numbers from a market research firm indicate that Microsoft (MSFT) surpassed SanDisk (SNDK) as the No. 2 vendor of MP3 players behind Apple (AAPL) during the week of the Zune debut.

For the week ended Nov. 18, Microsoft had a 9% unit share and 13% dollar share of the U.S. portable player market, while Apple had 63% unit share and 72.5% dollar share.

"Microsoft attracted early adopters in a successful launch week for Zune, eking out SanDisk as the No. 2 digital audio player vendor," NPD's Ross Rubin, director of industry analysis, said in a statement. "This was especially impressive given the Zune's single capacity configuration and relatively high price point."

Still, the Zune was outsold by players that are compatible with Microsoft's PlaysForSure technology as a group, he said.

PlaysForSure prevents unauthorized copying of music and ensures that songs sold from music services like Napster (NAPS) and RealNetworks' (RNWK) Rhapsody will play on a variety of different MP3 players. Portable devices that run Windows-based software are compatible with PlaysForSure, but Microsoft's own Zune is not.

The new statistics are a bit of encouraging news for the beleaguered behemoth which has received less-than-stellar reviews of its new music player and has been handily outsold by its competitors on sites like Amazon.com (AMZN) since the holiday shopping season kicked off on Friday.

Microsoft shares added 21 cents to $29.60 in recent trading on Wednesday. Meanwhile, Apple slipped 19 cents to $91.62 while SanDisk shed 84 cents to $43.93.