Microsoft Ready to Lose Money with Zune

At $249.99, Microsoft said they are ready to loose money this holiday season to compete with the iPod. "We had to look at what was in the market and offer a competitive price," said Scott Erickson, Microsoft's senior director of product marketing for Zune. "We're not going to be profitable this holiday but the Zune project is a multiyear strategy." The company has said it plans to invest hundreds of millions of dollars to develop and market the Zune, and acknowledged the investment may take years to bear fruit.

When it goes on sale on November 14, the Zune will retail for $249.99 and we may see it at discounted prices at Amazon and Wal-mart. Songs available for download at the Zune Marketplace service will cost about 99 cents. A subscription based option will be available for $14.99, allowing users to listen to any of the songs on Zune Marketplace. It pledges to offer 2 million-plus songs at launch. After the pass expires, users will not be able to access those songs. Source: Reuters