Microsoft has chosen a conservative path by pricing the Zune portable media player at $249 US retail. The price is competitive with the Apple iPod (30GB). Zune's music store will similarly be competitive with $1 downloads and $15/mo unlimited rental service (comparable to RealNetworks' Rhapsody).

By refusing to price the new product as a loss leader to capture market share, Microsoft risks being rolled over by Apple's superior brand and market share. Zune will compete against the iPod with extra features - wireless file transfer, file sharing, FM tuning, and a subscription offering that iTunes doesn't offer. Few observers, including this writer, believe that this strategy will make a significant dent in Apple's position.