Oh so often in Microsoft’s (MSFT) not so intellectual business moves, they go ahead and enter a market and business that isn’t natural for a software company. Microsoft’s Live Search is a perfect example of a company’s desperate attempt to enter a new market. Spending tremendous amounts of capital for a third-rate search experience. In another attempt at grabbing extra revenue from other markets, Microsoft’s failure of a music player, the Zune, is losing traction, fast.

Meanwhile, Apple (AAPL) has been making record profits, as their products continue to skyrocket towards greater sales and margins. The introduction of the iPod in 2001 is without a doubt when Apple began its tremendous turnaround. Now, with 5 products that all have a variety of “iPod” functionality and market share that encompasses about 75 to 80 percent of music player sales, it’s clear that Apple is creating THE music player.

Despite these terrible statistics for an entering company, Microsoft decided to go forth with their own music player. With a choice of three colors, Brown, Black, and White, the Zune player certainly hasn’t failed because of choices (not that the color variable was even in question). Originally, the Zune introduced at a competitive price of $249 to Apple’s iPod, which was priced at $299. Both were 30 GB large and both were capable of playing video, but any real similarities or postives for the Zune end there.

The Apple iPod product line-up has continuously been evolving. Various additions to the original iPod product have also been introduced. What has Microsoft been doing in the mean time? Price-cutting, price-cutting, and a little bit more price-cutting. Oh, I almost forgot, they added a whole two new colors! The player has quickly dropped 20 percent of its original price tag. Originally selling for $249, the player now sells for $199 (little known to much of the current media, as the price drop was made on September 5th, or the day of Apple’s special event), and can even be found on interestingly sketchy sites for about $149.

The Zune was doomed from the start. The music player isn’t cross-compatible with Macintosh computer platforms, and only works with Microsoft’s own attempt at a music store/player. That means that any music you’ve downloaded from the iTunes store can’t get transferred to the Zune.

Scariest of all, are the deep cuts into the price point, without any real noticeable upgrades and improvements. The Zune was to compete directly with the regular iPod, which is now known as the iPod Classic. The funny thing is that the Zune is now $199, and still 30 GB. Meanwhile, the iPod Classic has a base price point of $249, and comes with an 80 GB hard drive. Sorry Microsoft, but your price cuts aren’t upgrades, find some other product/business to steal market share from.

Disclosure: Long Apple Inc. (AAPL)

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This entry was posted on Friday, September 7th, 2007 at 3:58 pm and is filed under Apple (AAPL), Microsoft (MSFT), iPod, iPod Classic. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.