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As new iPods loom, Zune gets price cut

Microsoft says $50 price drop is "part of the normal product life cycle." But it coincides with a widely expected launch of new iPods.

With Apple widely expected to introduce new iPods later Wednesday, Microsoft has cut the price of the Zune player by $50, dropping it to $199.

Microsoft announced the cut Tuesday on its ZuneInsider Web site, saying the move was part of a longstanding plan. The price cut, however, does coincide with an Apple press event where the company is expected to announce new models of its market-dominating iPod.

"It's part of the normal product life cycle, something we've had on the books for months," Microsoft's Cesar Menendez said in a blog posting. "We just got some research back and customer satisfaction with the 30GB device is really high (around 94 percent), and we expect even more consumers will now want to discover the Zune experience at the new lower price."

The Zune, which went on sale in November, has grabbed 9 percent to 10 percent of the U.S. retail market for hard-drive-based MP3 players in recent months, according to market researcher NPD. Microsoft said it shipped 1.2 million Zunes through June, the end of its fiscal year, exceeding a goal of 1 million shipments.

Although Microsoft is now making an official price cut, the Zune could often be found for well below the $249 suggested price.