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Microsoft’s Zune Player pricing is out, though some analysts are saying Microsoft may lose money initially to gain market share.
The Zune Player will be available to consumers in the US on November 14 – just in time for Christmas at an RRP of $US250. For the money, consumers will get a 30GB player complete with Zune-to-Zune Wi-Fi connectivity, 3-inch LCD screen, built-in FM tuner as well as a selection of preloaded music, music video, film shorts and images.
The Zune music service will launch on the same day with songs costing $US0.99 each. A Zune Pass subscription service will also be available, costing $US15 a month.
A full accessories range will complement the player with prices ranging from $US20 – $US100.
The Zune player with its music subscription service will be competing directly with the iPod + iTunes empire. Jupiter Research Analyst Michael Gartenberg said on his blog that it is likely that Microsoft is taking a gamble on price in order to capture market share.
“[It’s] Hard to see how they’re making money though at $249. They can’t be getting the volume discounts Apple gets and that larger screen and WiFi all add to the bill of materials. The key , I suspect, was not being undercut by Apple and if they need to lose money on Zune to build market share, they will, much as they have done with XBox. For the moment, price against Apple will not be a factor,” he said.
When Microsoft first announced the upcoming Zune, Gartenberg said in his blog:
“Bottom line, when Microsoft decides to enter a market, you can’t ignore the impact they will make. It’s likely that by force of will and spending lots of money on marketing with a high cost of acquisition on new users, they will can [sic] capture some market share.
Early market share, however, isn’t likely to come from disgruntled iPod users looking to switch. The real losers in the short term are likely to be the likes of Creative, iRiver and other former partners that have failed to deliver to market share from Apple and will now find themselves not only competing with Apple but with their former partners from Redmond.”
