As the folks in Cupertino get ready to drop whatever music-related announcements they have in store tomorrow, the folks in Redmond are making a move of their own, dropping the price on its Zune music player to $199. Microsoft’s Cesar Menendez describes the price reduction as part of the Zune’s planned product life-cycle and "something we’ve had on the books for months;" he also says consumer research is showing a 94 percent satisfaction rate with the 30 GB version of the Zune.
Traditionally, electronics makers reduce prices on products to match new price points defined by competition, to spur new sales in a market that has gone relatively stagnant at a previous price point, or to clear inventory in anticipation of an updated product. All three factors could be playing into Microsoft’s Zune price drop: the product shipped in November of 2006, meaning Zune has been on the market at its current price point for almost 10 months. Microsoft will also undoubtedly be facing fresh competition from Apple as it undoubtedly moved to refresh its iPod line in advance of the end-of-year holidays…and if Microsoft really is in the portable media player market for the long term, there’s likely a "Zune II" getting ready to hit the retail channels before the holidays.
