In an interview with the Seattle Post-Intelligencer Monday, Microsoft said a number of factors had contributed to rough Zune sales, even though Microsoft had assured reporters at the Consumer Electronics Show earlier this month that Zune sales over the holidays were "fine."

"Some of them are environmental," said Zune Director of Marketing Adam Sohn to the Post-Intelligencer when asked about the particulars. "Everyone knows that the economy is not what it was a year ago, and that is hurting some folks. We are in a position where the category is also shrinking. So I think those are things that affected everybody's sales, including Apple."

Sohn also told the newspaper that Microsoft had not been as aggressive at the end of 2008 with introducing new products and pushing Zune sales through resale outlets. A year before, he contended, Microsoft had a large stock of 30-GB Zunes and pushed its sales channels harder to get them out.

"We knew we were going to be at a lower volume simply because of the external factors and what happened with the 30s," he said.

Sohn described the planning for new Zune product rollouts as "fast and furious."

"Every time anything comes up, there is a set of people who pull a Chicken Little and say, 'The sky is falling. Zune is dead,'" Sohn said. "The fact is we are on track to deliver the next generation of Zune innovation in software and hardware."

Despite a reported 16 percent decline in sales, Apple's iPod continues to dominate the U.S. MP3 player market. Apple CFO Peter Oppenheimer and most analysts put the iPod's U.S. market share at 70 percent.