The price of the 4-GB Zune dropped to $99 from $129, the 8-GB Zune to $139 from $149, and the 16-GB Zune to $179 from $199. Microsoft also sells 80-GB and 120-GB models for $229 and $249, respectively.
The new prices for the 8-GB and 16-GB Zune makes the devices less expensive than comparable iPod Nano models that sell for $149 and $199, respectively. However, Adam Sohn, Zune's marketing director for Microsoft, told the tech site iLounge that the cuts were not motivated by Apple's more popular competitors. Instead, the price drops were to "ensure hopefully we have a good holiday season."
The new prices took affect Wednesday in the United States, and are scheduled to begin in Canada on Friday, iLounge reported.
Apple's iPod accounts for more than 70% of the market for portable music players, and Microsoft, which launched the Zune more than two years ago, has failed to make a dent in Apple's lead. Apple also has been successful in blending its iPod entertainment capabilities, which include video, into the iPhone, which has become a top seller in the U.S. smartphone market.
While Microsoft has not announced any plans to build a Zune with mobile phone capabilities, Steve Ballmer, the company's chief executive, has said the company is exploring the idea of porting Zune software to Windows Mobile devices.