Microsoft caught off-guard by new iPod pricing

Apple’s pricing on the updated fifth-generation iPods has caused Microsoft to rethink the price point for its Zune media player, according to one analyst. “Microsoft formally announced its Zune portable media player, with specs in-line with Toshiba FCC filings. However, pricing and timing were not revealed likely because our sources indicate that Apple’s aggressive pricing at $249 for its new 30GB iPod took Microsoft by surprise,” American Technology Research analyst Shaw Wu said in a research note today. “We believe Microsoft is re-thinking its pricing strategy amid potential wider losses to stay competitive in the marketplace. We remain underwhelmed with the much-hyped Zune, which is essentially a repackaged Toshiba Gigabeat, with limited differentiation vs. existing Windows Media devices.” Microsoft was widely expected to announce a $299 retail price this week, but following Apple’s price cut on Tuesday on the 30GB iPod, the company declined to offer pricing or a release date.