Zune is getting off to a soft start, thanks in part to an increasingly-powerful iPod.  During the holiday quarter, Apple sold a whopping 21.1 million units, a record-breaking level that highlights the competitive challenge that Microsoft faces.  Meanwhile, the software giant is facing continued criticism for steering away from PlaysForSure, a decision that has angered a large number of software and device partners.  During a Saturday discussion at MidemNet, Zune marketing chief Chris Stephenson defended the move, noting that "PlaysForSure is not dead, PlaysForSure is being supported," though he did admit that the system had a history of not being "100% quality controlled".  In terms of sales performance, Stephenson pointed to sales of one million units by July, though the picture still remains early. 

Europeans were heavily represented at the event, begging the question of just when the Zune will cross the Atlantic.  Stephenson noted that a launch was scheduled for the fourth quarter, though specific territories were not discussed.  Other Zune players are also on the way, including a flash-based player, which was pegged for the fourth quarter as well. 

That raises a sticky question: will those future devices include a per-unit royalty to content holders like Universal Music Group?  Stephenson was decidedly cool on the prospect, noting that it was "not the right question," and not necessarily the best way for the partners to grow the market.  He also said that the UMG arrangement was "not a long-term deal," though he did admit that discussions were happening with "other content owners".  Now, the lingering question is whether Universal Music chairman Doug Morris has opened a Pandora's Box for Microsoft and other manufacturers.

Elsewhere, Stephenson pointed to the release of a truly WiFi-enabled device, a release that would follow the recently-launched Sansa Connect from SanDisk at CES.

[via DigitalMusicNews]

related articles:
Zune in Europe at the end of 2007 (Jason Reindorp announcement at Midem Net)
Ballmer: Zune will move very fast (Why the PFS was substituted with Zune 1)
Zune Marketplace on PFS devices? (Semi-Compatible)
Zune Flash Memory Player (Bryan Lee also talks about 3p/3p feature saying its up for review)
Sansa Connect announcement at CES 2007