Dec. 4 (Bloomberg) -- Microsoft Corp.'s Zune device dropped to fifth place from second in the U.S. market for digital media players in its second week in stores, market researcher NPD Group Inc. said.

Zune captured 2.1 percent of the market in the week ended Nov. 25, said Stephen Baker, an analyst at Port Washington, New York-based NPD, in an interview today. Baker said Apple Computer Inc.'s iPod remained the leader, with 39.4 percent that week, based on units sold.

Zune's market share declined as SanDisk Corp. boosted sales with a 50 percent price cut on its media players, taking a 39.3 percent share and knocking Microsoft from the No. 2 spot it occupied in its first week in the market. Redmond, Washington- based Microsoft sold about the same number of units as the previous week, failing to keep pace with rising holiday sales.

``Zune did OK in the first week and OK in the second week, but they haven't had any major impact on Apple,'' Baker said. Apple held 75 percent of the U.S. media player market for the nine months through September, according to NPD.

Baker said SanDisk typically cuts prices the week of the U.S. Thanksgiving holiday, taking more of the market from Apple than usual.

Grabbing Share

Zune took 9 percent share of units sold in its first week on the market, beating out SanDisk for second place after iPod in the week ended Nov. 18. Apple had a 63 percent share that week.

``Second place for Zune is by no means a done deal,'' said Michael Gartenberg, an analyst at New York-based JupiterResearch.

Microsoft, the world's largest software maker, is spending hundreds of millions of dollars on Zune to dent Apple's dominance in the market.

Shares of Microsoft rose 21 cents to $29.33 at 4:30 p.m. New York time in Nasdaq Stock Market composite trading. Shares of Milpitas, California-based SanDisk rose 41 cents to $44.91 and Cupertino, California-based Apple slipped 20 cents to $91.12.

Creative Technology Ltd. was third, while Memorex International Inc. was fourth. Walt Disney Co. tied for fifth place with Microsoft.

Overall unit sales rose 26 percent from the same week of last year, Baker said. NPD doesn't disclose the number of units each company sold.

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net;

Last Updated: December 4, 2006 16:42 EST