Launched earlier this month into the US market the product is not tracking well in the US and at a recent Microsoft Australia function senior executives were reluctant to comment on the device.

Microsoft  launched Zune and its companion online media store on Nov. 14 to compete primarily with Apple Computer's iPod music player and iTunes store. But an investor note sent this week from Piper Jaffray analyst Gene Munster had some good news for rival Apple: According to his survey of 40 retailers, only 8% recommended Microsoft's Zune, while 75% recommended Apple's market-leading iPod. Apple's recommendation rate increased from 63% last June and 68% last November.

More alarming are some of the responses when Munster's team asked salespeople about the Zune. "I've never heard of the Zune," one clerk said. "Who makes that (the Zune)?" asked another. Other clerks promoted some of Zune's features that Apple's iPod lacks. "The Zune is the same price as the iPod, but it has Wi-Fi and a built-in FM tuner," said one salesperson. "I love it; I have it and I love it," another said.

But is it selling? The Zune has fallen on online retailer Amazon.com's top sales rankings. On Nov. 16, the black Zune was the No. 7 best seller in Amazon's MP3 player list, according to Munster. By Nov. 20, it fell to no. 13. Today, it ranks No. 21, behind devices from Apple, Creative and SanDisk the top five selling devices are all iPods.

Microsoft's public relations firm didn't immediately return a call seeking comment on today's report.

The problem for Microsoft is that the Zune is not taking sales away from the iPod but Microsoft customers like Creative, iRiver, Toshiba, SanDisk all organisations that license an operating system from Microsoft. By launching the Zune Microsoft is openly shafting these Companies while also sending them a message that they have no faith in the success of their competitors products.

Digital Trends just published a detailed review of the Microsoft Zune and it ain't pretty. Verdict: "The Microsoft Zune is one of those products that you will want to avoid at all costs; at least this first generation."

Quote from the Zune Review: "Sometimes, if your partners can't get the job done, you just have to do it yourself. And this is exactly what Microsoft is trying to do with the introduction of the Zune, a portable audio and video player built specifically by Microsoft. Arguably meant for early adopters, the Zune promises a "social" aspect rarely seen by other media players in the form of wireless music sharing. Featuring a large 3-inch screen, the Microsoft Zune allows both music and video playback for under $250 US. "