Microsoft announced the availability of the Zune HD 64GB model last week.
This $350 updated (storage-wise) Zune is only available through the Zune Originals site which takes forever to render its Adobe Flash (no Silverlight, Microsoft) image.
The 32GB model is priced at $270 while the 16GB model is $200. Apple’s iPod touch models are priced at $400 (64GB), $300 (32GB), and $200 (8GB). So, there is savings associated with buying a Zune instead of an iPod touch. And the differential is especially interesting at the low-end where $200 buys twice as much flash storage. The Zune HD 16GB model is available for a hair over $170 at Amazon at the moment. But, the 64GB model is nowhere to be seen there.
The problem the Zune faces is that iPod owners have a heavy investment in peripherals and iTunes. It will take much more than a $30 to $50 savings to move to a new platform. Microsoft needs to price the Zune HD models at $80, $120, and $150 if it really wants to take a bite out of Apple.