Microsoft (MSFT) Zune Being Washed Out With The Tide

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It is like fighting an army with a pea-shooter. Microsoft (MSFT) is changing the subscription model for its Apple (AAPL) iPod knock-off, the Zune.

According to Reuters, MSFT "announced a new music subscription plan for owners of its Zune players, which would allow them to keep 10 tracks per month and add them to their permanent collection.".

With 180 million iPods sold around the world since it was introduced by Apple six years ago, Microsoft would have to give away music for free to get any substantial part of that market, and that may not be such a bad idea.

Looking at the billions of dollars that Redmond spent to pick up market share for its Xbox which was launched into a market dominated by Sony’s (SNE) Playstation, Microsoft will have to make a similar push to make any difference in its competition against the iPod.

The cost of a subscription to Microsoft’s music download plan is $14.99 a month. It would be expensive to underwrite that for a million people, but it would be possible with the software company’s balance sheet. The $14 million investment each month is actually modest.

It will take that kind of investment to save the Zune from oblivion.

Douglas A. McIntyre