According to Engadget, Microsoft's (NASDAQ: MSFT) Zune is being sold for about 20% off its normal retail price. The figure is at least that low at Staples, and Circuit City also has the product for sale at a deep discount.
Whether the discount is by design or the retailers are simply trying to clear out inventory is still unknown.
The Zune has now sold over a million copies since it was introduced, but that is a rain drop in the ocean compared to sales of Apple's (NASDAQ: AAPL) iPod at the 100 million plus. Estimates for iPod sales in the current quarter run at about 10 million, depending on which Wall Street analyst is polled.
Micorosoft now has a problem it can only solve with price. Apple's lead in the MP3 player market is still much too wide for the world's largest software company to gain market share on an equal-price footing.
Microsoft was willing to lose large sums on the Xbox in an effort to gain on Sony's (NYSE: SNE) PlayStation. The company is losing money on its internet properties now. So, there is evidence that making a large investment is not outside the firm's culture, if it appears there may be some reward down the road.
The odds of Microsoft's Zune doing well are still long, but they would shorten a bit if the product sells for $175.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
6-11-2007 @ 12:23PM
rjtechnology said...
Success will not be guaranteed by price.
The Zune had promise but Microsoft put out a product without features that many users feel are basic needs. In addition the WiFi capability is essentially useless with so few players. I have yet to find anyone else with a Zune to connect to. I may leave a sheltered life but NOT THAT SHELTERED!
No clock, no easy PodCast support, and no easy USB storage ability. The large display is wonderful though and the WiFi capability which could have been a great feature has no real pizzaz.
6-11-2007 @ 5:20PM
Joe said...
hahahah you actually paid for a Zune rjtechnology?!? If I wanted to be in the social I wouldn't seclude myself by listening to a mp3 player with headphones, I would go to a club with a sound system. Then you can say Welcome to the social.