With the economy tanking and the holidays looming, Microsoft is hoping to salvage some Zune sales by chopping prices.
The software maker plans to announce on Wednesday a price cut for its flash-based models. The 4GB version will drop to $99, the 8GB model will drop by $10 to $139, and the 16GB model will sell for $179, down from $199.
Microsoft is also cutting prices for several of its Zune accessories. The cuts take effect on Wednesday in the U.S. and on Friday in Canada.
Zune marketing director Adam Sohn said in an interview on Tuesday that the moves were being made to "ensure hopefully we have a good holiday season." The prices put Zune's flash players cheaper than a similar capacity iPod Nano, though Sohn said that wasn't the explicit goal of the price cuts.
"We're trying to take into consideration what the realities of the market are," Sohn said.
The company introduced the latest Zune models, as well as the version 3.0 update to its software in September. Microsoft introduced a few new games and other device features on Tuesday as part of a version 3.1 firmware update.
Microsoft also kicked off a new wave of TV ads on Monday that aim to get more people to download the free Zune software, even if they haven't yet decided to plunk down for a Zune player or Zune Pass subscription.
"We think we need to attack it from both sides," Sohn said. The ads will run in prime time as well as on national cable and online, he said.