Microsoft announced last week that it has sold 2 million Zunes. In the PR releases, Microsoft focused on announcing the one percent increase that was seen in Zune’s market share last quarter (Q1 2008) compared to that of Q1 2007. The reason why Microsoft PR emphasized on their 4% Zune market share and not number of units sold, was because there was a decrease in number of units sold in Q1 2008 compared to Q1 2007. If you just line up the facts, you will see that Zune sales are falling even after Microsoft added three new models to its Zune lineup.  Microsoft sold 1.2 million Zune’s in the first 8 months of sales. The company started selling 30GB Zune in November 2006 and reached the 1.2 million mark in June 2007. It took Microsoft more than 11 months to sell the next 0.8 million Zunes. Consider that Microsoft was selling equal number of Zunes every month till they reaches 1.2 million mark in June 2007. So Microsoft was selling 150,000 Zunes every month in first 8 months of sales. Now, consider the next 11 months when it sold another 800,000 Zunes, the company was selling 72,000 Zunes every month, that is less the half of what they sold earlier. Most websites are reporting that there was hardly any acceleration or sales were modest for Zune, but truth is Zune sales were bad. If there is a decrease of 50% in year over year sales, that is a very bad sign for the company. Apple and SanDisk were the only two companies in top five MP3 makers for Q1 2008 that sold more units than they sold a year before for the first quarter 2007. Both Creative and Microsoft saw a decrease in total number of units sold year over year in Q1 2008. Even after adding three new models 4GB Zune, 8GB Zune and 80 GB Zune in November 2007, Microsoft saw a decrease in unit sales that is really detrimental for the company. The time it took Microsoft to sell 2 million Zunes (between November 2006 and May 2008), Apple sold 76 million iPods. In fact, in the past two year, Zune had no impact on iPod sales (Microsoft’s main reason for launching Zune) and looking at the decrease in unit sales for Zune there might not be any effect in the future too.