Microsoft Takes Aim at Apple with Zune Price Cuts, Software Push

This holiday season, Microsoft is taking aim at arch-rival Apple's iPod - and its companion iTunes software. This week, Microsoft cut the retail prices on 4GB, 8GB, and 16GB Zunes as well as on the Car Pack, Home/AV Pack, and Dock Pack. With the 8GB Zune now selling for $139 (was $149) and the 16GB model now selling for $179 (was $199), Microsoft is undercutting the price of comparable Nanos by $10 (8GB) and by $20 (16GB). The 4GB Zune anchors the lineup at $99, down $30 from its old price.

The Car Pack now sells for $69 (was $79), but the Home/AV Pack, also formerly $79, is now just $59. The Dock Pack is also cheaper at $39 (was $49).

To help PC users get more interested in Zune hardware, Microsoft has borrowed a page from Apple's use of its iTunes software to drive customers to iPods. In a new video ad, Microsoft plays up the Zune's PC software companion, Zune 3.0.

Will Microsoft's one-two hardware-software combination be enough to make significant inroads into Apple's market dominance? Only Black Friday and the rest of the holiday shopping season will tell.

What do you want under your Christmas tree? An iPod, a Zune, or a third-party media player? Hit Comment and tell us what's on your wish list.