iPod diehards and Microsoft pricing

Reader Andy responds to  "Opinion: Why Microsoft's Zune scares Apple to the core," and Mike Elgan replies.

Reader Andy:

1. The iPod is all but ubiquitous. You're right--the Zune won't go mano-a-mano against the iPod because Microsoft needs to capture and take market share from iPod diehards, and that isn't going to be easy. The diehards are partly comprised of the prized segment of the non-geek public. They're not going to give up their iPods unless they have a compelling reason, and I just don't think Zune is it.

2. What happened to the tried-and-true Microsoft tactic of underpricing the competitor in order to force them out of the marketplace? It's worked so well for Microsoft in the past, and I'm surprised Big M is coming in at the same price point as Apple. C'mon, where's the incentive for the uninitiated to choose the Zune over a comparable iPod? Three reasons I'm shopping around for a SanDisk instead of an iPod: price, price, price.

3. Bottom line: Microsoft makes a big splash when a product lands, but the support isn't there. Remember Origami? Neither do I. And we won't see it again...until it pops up in November/December of this year, heading many, many of the trade magazines' "Worst of 2006" roundups.

Mike Elgan replies:

*** Microsoft needs to capture and take market share from iPod diehards ***

The overwhelming majority of iPod "diehards" are Windows users who are about to be given a sustained full court press on Zune and Marketplace by Microsoft. And 270 million Windows users have never owned an iPod. They'll be getting the press as well.

*** What happened to the tried-and-true Microsoft tactic of underpricing the competitor in order to force them out of the marketplace? ***

Microsoft will be launching Zune at a $30 to $50 loss per unit. It's enough to squeeze Apple on pricing -- which Apple doesn't appreciate.

*** Remember Origami? ***

Origami wasn't a Microsoft product, per se, and it wasn't central to its "living room" strategy. Zune is both.

And remember, Zune doesn't have to succeed in order for Apple to be harmed.

I do appreciate you taking the time to write to me.

Best,

Mike Elgan