Microsoft rethinks its Zune strategy

It looks as though Apple prematurely crashed Microsoft’s party when it announced that the newly improved 30GB HDD-based iPod would retail for $249. DailyTech touched on this issue in yesterday's article on Apple's plan to maximize its profits with the latest generation of iPod devices. Microsoft's Chris Stephensen seemed a little rattled by the $249 announcement:

I'm not sure what they think we're doing. It's certainly an interesting thing to do - to reduce the price of a good-selling product like that - that was selling well at $299. We'll take it as it is. It's an interesting move on their part, and it's an interesting opportunity in the market place.

BetaNews expounds upon that point with information that Microsoft was set to reveal pricing alongside the official Zune announcement this past Thursday. Apple's Tuesday announcement, however, put those plans on the back burner leaving the Redmond giant in an awkward position. From BetaNews:

Sources within Microsoft indicate that the company is taking a "we will not be undersold" approach in its pricing structure, and was likely to announce a price that was either the same or lower than that of a comparable iPod. Undercutting the iPod is a major goal of Microsoft's upcoming effort, say these sources.

The question now is will Microsoft try to undercut the 30GB iPod to gain marketshare in the portable audio arena or will Zune come out with a higher price tag and bank on its larger screen and wireless media sharing to woo customers. Microsoft is already seeing red when it comes to XBOX 360 hardware, so another money-losing venture might not sit too well with the top brass and shareholders.

"Nowadays, security guys break the Mac every single day. Every single day, they come out with a total exploit, your machine can be taken over totally. I dare anybody to do that once a month on the Windows machine." -- Bill Gates
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