Microsoft says Zune to sell for $249

The Zune, which also comes with 30GB of storage, will retail for $249.99 (about 99 cents more than the iPod) when it goes on sale Nov. 14. Songs available for download at the Zune Marketplace service will cost about 99 cents a song, on par with prices at Apple's iTunes, Microsoft told Reuters.

The Redmond, Wash.-based software maker also told the media outlet that it needed to put a comparable price on Zune, even if it meant suffering a loss from the device's sales this holiday season.

"We had to look at what was in the market and offer a competitive price," said Scott Erickson, Microsoft's senior director of product marketing for Zune. "We're not going to be profitable this holiday but the Zune project is a multiyear strategy."

Microsoft has said it plans to spend hundreds of millions of dollars over the course of the next several years in a bid to catch Apple's iPod.

The Zune player is the first step in creating a new brand of portable devices, the company has said, adding that a Zune phone is also in the works.