Microsoft sets 30GB Zune price at $249.99

“Microsoft Corp. said on Thursday its new Zune music player will be sold at a price matching Apple Computer Inc.’s market-leading iPod and, as a result, lose money this holiday season,” Reuters reports.

“Microsoft’s 30-gigabyte Zune will retail for $249.99 — 99 cents higher than the iPod with the same amount of storage — when it goes on sale November 14. Songs available for download at the Zune Marketplace service will cost about 99 cents a song, on par with prices at Apple’s iTunes, Microsoft said,” Reuters reports. “The world’s largest software maker faces an uphill climb in trying to topple the popular iPod after conceding a five-year head start to Apple’s media player.”

MacDailyNews Take: Microsoft didn’t concede a thing. They tried PlaysForSure and got their collective ass handed to them by Apple.

Reuters continues, “Microsoft said it needed to put a comparable price on Zune, even if it meant that the company will suffer a loss from the device’s sales this holiday season.”

“The rectangular Zune media player has a round click wheel and is similar in appearance to the iPod, though slightly bulkier and has a larger 3-inch screen,” Reuters reports.

MacDailyNews Note: Zune “features” a fake click wheel that is really just a four-way rocker switch that’s presumably intended to follow the usual Microsoft strategy of trying to delude the buying public with products that are reminiscent of Apple innovations.

Reuters continues, “The music player is the first step in creating a new brand of portable devices, according to Microsoft officials, who also said a Zune phone is in the works… Microsoft said it will initially sell only music — and no video — at the Zune Marketplace. The company said it was negotiating with major record companies and labels.”

Full article here.

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55 Comments

  1. So they will lose money on the hardware, and as Apple has proven with iTunes, they will barely break even on the 99 cents song model, and as all the other subscription services have proven, they will lose money on subscriptions.. So even if they gain some marketshsare, what’s the point? Ego?

  2. The Redmond, Washington-based software giant has said it plans to invest hundreds of millions of dollars to develop and market the Zune, and acknowledged the investment may take years to bear fruit.

    Please note that the words “lose” and “invest” are mutually interchangeable for the purposes of this article.

    Bizarrely, my MW is “economic”. The world is a spooky place.

  3. Goliath, it’s pretty simple – Apple sells so many iPods that the volume justifies cheaper components from manufacturers. Why does Wal Mart offer cheaper pricing? Same thing.

    All this will do is give the millions of Apple haters something else to buy. It won’t make any sense except on an emotional level for many people.

  4. People will quickly find out that it is definitely a faux click wheel. Not to mention that this thing won’t get squat for battery life with the mostly useless Wi-Fi feature eating up all that power. This sucker is absolutely going to be stillborn….

  5. As clearly stated, even at 249.99 they are taking a loss. To undercut it further was probably not an option.

    Herein lies a large factor as to why Zune will fail: who’s going to want to hitch their wagon to a product that is sold at a loss and thus has a cloudy future when the iPod makes Apple obscene amounts of money and is in no danger of being discontinued any time soon?

    MS is hoping a lot of people signs up for subscriptions, because that’s the only avenue for them to make any money going this route.

  6. Goliath: economies of scale.

    When you buy 10 million of a thing, you get a better per-unit price for it than if you buy 1 million. (Same idea as warehouse stores like BJ’s, Sam’s Club, and Costco. Same reason Wal-Mart can sell things for cheaper than the competition – WalMart buys millions of widgets, while the competition buys hundreds of thousands.)

    When you contract with a company to assemble your device, you get a better deal if you can commit to 8 to 10 million units per quarter than if you can commit to 1 million per quarter.

    You spend the same amount of money designing the thing; but the cost is spread out over 10 million units rather than 1 million.

    It’s not clear that Microsoft will lose money on each individual Zune player sold. It is baffling, though, that they expect to sell it at the same price point as an iPod and expect enough people to buy it to make a significant dent in Apple’s iPod market share.

    I expect another “blood on the click wheel” story in the not-too-distant future.

  7. Serious answer: Because Apple has at least 5 years of experience in the digital music marketplace and learned from their trial and errors with their manufacturers.

    Since Apple built the marketshare to around 60% to 70%(depend on who you read from) using the $299 iPod benchmark. They can afford to cut the price down while ancipicating M$ wannabee copycat device entering the market on that price point. Apple is playing M$ like Lucy is pulling the football away in the last second to Charlie Brown.

  8. The truly amusing thing about this Piece of Crap is that when it does finally ship, the 6G ViPod will ship within days . . . making the Zune DOA and the laughing stock of the electronics industry.

    I weep (read that “pray”) for the death of the GTL (Great Thunder Lizard) in Redmond.

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