Microsoft's Zune player to hit US stores

Microsoft's Zune will hit US retail shelves as expected on Tuesday, but analysts don't see users abandoning their iPods for it

Microsoft's competitor to Apple Computer's iPod will hit US retail shelves as expected on Tuesday, ensuring at least one of Microsoft's major product releases this year will be available to consumers in time for the busy Christmas shopping season. However, the local release date has still not been confirmed.

Although Zune will make it out the door before Windows Vista and Microsoft Office, analysts don't foresee Zune will take a big chunk out of iPod's popularity with holiday buyers.

The 30GB Zune digital media player will cost $US249.99 and be available Tuesday in more than 30,000 retail outlets in the US. Zune players cost the same amount as the video iPods currently available from Apple, and play videos, music and can display photos. Zune Marketplace, an online music purchasing and download service, also will be available on Tuesday.

Analysts initially don't think Zune will have much of an effect on iPod sales. A research report by financial firm, Piper Jaffray & Co, predicted there would be little near-term impact on iPod sales from Zune's launch, and said Zune's key differentiators -- an FM receiver and wireless capability that allows users to pass songs between devices -- probably wouldn't draw customers away from the IPod.

"While the FM receiver is one of the most highly requested features for the iPod, we believe the Zune's most talked about differentiator, wireless sharing with other Zunes, will not turn out to be a significant selling point," analysts wrote in the research note.

Piper Jaffray also predicts that Zune will probably have no impact on iPod market share in the next six months unless Microsoft starteda massive marketing effort within the next few weeks.

Microsoft did attempt to get the word out on Zune with a launch party and concert in Seattle, where Microsoft chairman, Bill Gates, appeared on stage with John Richards, a local radio-show host for Seattle's KEXP station, to demonstrate Zune's wireless-sharing feature. A band called The Secret Machines performed at the event in Seattle, and Microsoft is hosting other concerts to kick off Zune in New York, Los Angeles, Chicago, Miami and Atlanta. Features performances will be by the groups Queens of the Stone Age and Red Hot Chili Peppers, which will perform in New York and Los Angeles, respectively.

Unlike Apple's iTunes, which lets users buy individual songs or entire albums but does not offer a subscription service, Microsoft will offer a monthly subscription called Zune Pass. For $US14.99 a month, users will have access to millions of songs, but won't actually own those songs. Users also can buy songs individually using Microsoft's points system, which works like a prepaid card and can be used for other Microsoft online store properties, such as Xbox Live.

One track on the Zune Marketplace will cost 79 points -- or about $US0.99, which is what Apple also charges per song on iTunes. As of Tuesday consumers can purchase 1200 points for $US15, 2000 points for $US25, 4000 points for $US50, or pay $US44.97 for a three-month Zune Pass.

Zune accessories for using the Zune in a car or with speakers at home, also will be available, ranging in price from $US19.99 to $US99.99.

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Elizabeth Montalbano

IDG News Service
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