Creative Responds to iPod Price Drop

By Ed Oswald, BetaNews

March 1, 2005, 10:29 AM

Electronics maker Creative announced Tuesday that it would drop prices on its Zen Micro, a move that could be seen as a direct response to Apple's recent changes to its iPod line.

The 4GB Zen Micro dropped to $199, the 5GB to $229, and a new 6GB version will be introduced at a price of $249. The new pricing structure puts Creative in line with Apple's latest offerings.

To sweeten the deal, Creative is offering a $20 mail in rebate on the 4GB version for players bought before May 30, bringing the price down to $179.

The Zen Micro is currently the only Windows Media-based digital music player that has shown any promise of breaking into Apple's near-domination of the MP3 player market.

While no specific figures on sales of the Zen Micro alone have been made public, Creative sold 2 million MP3 players last quarter. That number is less than half of Apple's 4.5 million sold, but still is the closest any Windows-based player has come in over a year.

Sim Wong Hoo, CEO of Creative, continued to assert that the company is on the offensive rather than playing defense. "With the introduction of the Zen Micro 4GB MP3 player at the incredibly low price of only $179, we offer superior features and more than twice the song capacity of the 4GB iPod mini at a substantially better price," Hoo said in a statement.

Joe Wilcox, senior analyst with Jupiter Research, thinks that Apple is successfully fighting the pricing war. "I see the $20 rebate as more in response to Apple's iPod price cuts. While a reasonable move, the price cut is more defensive. Apple has left little room for other music player vendors to compete on price," he said.

"Better would be differentiating where Apple can't compete. Zen Micro supports Microsoft's Janus DRM and so subscription services like Napster to Go," Wilcox continued, noting that JupiterResearch surveys show that subscription services score highest among teens and 18-24 year olds. "Price cuts are good, but promoting appealing capabilities not available from Apple is better."

The 5GB player will be available at the new price immediately, and the company said it will take pre-orders for the 4GB and 6GB versions on its Web site starting today.