updated 03:55 pm EST, Tue November 18, 2008
MS Dropping Zune Prices
Just two months after introducing its third-generation Zune platform, Microsoft is already dropping prices on its flash-based models to improve their competitiveness, the company's Zune marketing director Adam Sohn has confirmed in an interview on Tuesday. The company's largest cut will apply to the outgoing 4GB Zune, which drops $30 to reach $99. Zune 8GB players will drop $10 to $139, while the 16GB player is being slashed by $20 to $179. Americans will see the cuts as of Wednesday, while Canadians will see a similar effect on Friday.
Sohn explains the moves as necessary to protect Microsoft's holiday sales for its lineup. The company has had to adapt to the "realities of the market," he says.
More detail isn't provided, though economic concerns are widely believed to be discouraging strictly luxury-focused purchases such as portable media players.
The cuts are unusual among device makers, which often wait until products are deeper into their launch cycles to lower prices and rekindle demand that may have sagged after release. Apple is understood to have followed similar last-moment pricing strategies itself and was forced to sell a limited number of 4GB iPod nanos in Canada and other non-US countries after deciding to bump the launch capacities to 8GB and 16GB at the last minute, which negated a potential Microsoft advantage.
Microsoft itself has also had little success gaining market share in the US and has often declined to illustrate Zune performance in its quarterly results, instead focusing on the Xbox 360.