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Zune due later today

Zune due later today

NEW YORK

Microsoft's competitor to Apple's iPod will hit retail shelves as expected later, 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, though Zune made 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 30G byte Zune digital media player will cost US$249.99 and be available Tuesday in more than 30,000 retail outlets in the U.S., including Circuit City and Best Buy stores. 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. released Monday 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 -- likely won'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.

Moreover, Piper Jaffray predicts that Zune will likely have no impact on iPod market share in the next six months "unless Microsoft starts a massive marketing effort within the next few weeks," according to the note.

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 music 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 $14.99 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 $0.99, which is what Apple also charges per song on iTunes. Beginning Tuesday consumers can purchase 1,200 points for $15, 2,000 points for $25, 4,000 points for $50, or pay $44.97 for a three-month Zune Pass.

Zune accessories for using the Zune in a car or with speakers at home, also will be available beginning Tuesday, ranging in price from $19.99 to $99.99.


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