SEATTLE - Microsoft Corp.'s Zune music player looks a lot like an iPod, acts a lot like an iPod and will cost about the same as an iPod. The software giant said Thursday that it will charge $249.99 for the device, signaling that it isn't planning to spark a major price war to gain market share.
"It's not going to be price that really drives people to Zune," said Michael Gartenberg, an analyst with Jupiter Research.
Instead, the company is hoping to gain an edge by touting two features Apple Computer Inc. doesn't offer on its iPod: a subscription music service, and the ability to share music with other Zune users through a wireless connection.
Microsoft plans to debut the portable music player and its companion online music service on Nov. 14 in the United States, just ahead of the holiday gift-buying rush.
The music service will let people buy songs individually for about 99 cents, the same price Apple charges for songs from its popular iTunes Music Store.
For Zune, Microsoft will use the same payment system as its Xbox Live online video game service, which lets people without credit cards buy prepaid cards at some retail stores.
Microsoft also will offer a Zune Pass subscription service, which will let users listen to any of about 2 million songs for $14.99 per month. RealNetworks Inc. charges the same monthly fee for its online music subscription service, Rhapsody to Go.
RealNetworks and others have offered such subscription services for years, although they haven't caught on with many mainstream users.
The ability to rent music, in addition to buying it, could offer Zune an edge against Apple's iPod and iTunes juggernaut. But Gartenberg said that to make the subscription service a selling point, Microsoft will have to convince a more mainstream audience to rent music.
"They're going to have to spend a lot of time educating the market," he said.
Scott Erickson, senior director of product management for Zune, said Microsoft is hoping that people will use the subscription service to seek out music they might not have known about, while also buying some songs outright.
Microsoft also is hoping to differentiate itself from the iPod by including wireless technology to let people share some of their favorite songs, playlists or pictures with other Zune users who are close by.
The other users can then listen to the songs three times over three days before deciding whether to buy the tune themselves.
But Gartenberg said Jupiter research has shown that only about 11 percent of consumers are interested in sharing music device-to-device. One reason for that may be that people are already commonly sharing music illegally, and don't see the value in a service that requires the other user to eventually pay for the song.
Microsoft is "going to have to evangelize the market if they're going to stress the feature," Gartenberg said.
Microsoft has said it plans a major promotion for Zune. Erickson wouldn't provide financial specifics but said the operation won't make money immediately.
"In total we won't be making a profit this year, but we will, of course, work toward becoming a profitable business in the future," he said.
Other hardware manufacturers, including Creative Technology Ltd. and Samsung Electronics Co., already offer portable media players that support Microsoft's software, but they've had little success against Apple.
The Zune player, to be made by Toshiba Corp., will have 30 gigabytes of memory, enough to hold about 7,500 songs.
It also will feature a 3-inch screen and a built-in FM transmitter, and will come loaded with about 25 songs and other content. The rectangular device has a simple look and feel similar to the iPod.
An iPod with a 30-gigabyte hard drive and a 2.5-inch screen sells for $249. Apple also offers lower- and higher-priced versions.