"Joe Wilcox writes that many retailers are starting to offer steep discounts on the Zune, which may indicate they are having trouble moving units. Staples is selling it for $199.99, fifty dollars off, Circuit City has it for $220. Amazon also has it for $220. So, what does it mean? Well, it could mean poor sales, absolutely...the other theory: Zune Version 2 is coming, and retailers know it, and are trying to offload inventory before that happens. It’s certainly possible."
I was reading this blog post by Nathan Weinberg and I was thinking that the online world sometimes gets so irrational it's funny. In this instance, we have a price drop on the Zune - Weinberg speculates it's because the product isn't selling very well. Possible? You bet - since you can get a 30 GB iPod for between $230 and $250 USD, the Zune at $249 isn't competitive on price at all. And when you're the underdog you need every advantage you can get - I always thought the Zune should have come out at $199 and undercut the iPod by a solid $50 margin. Weinberg's second theory is that since the second generation Zune is "coming", the price is dropping to clear the current inventory.
Reality check time: no company with an ounce of sense in their head releases a produce in November and obsoletes it by releasing a second version only five months later. I think some people were so disappointed with the first-generation Zune they're hoping it will fade away and become a memory, rapidly replaced by a newer, thinner, better version. That's going to happen eventually, but not five months after launch! That's just idiocy, and Microsoft may be a lot of things, but they've never been accused of shipping products too fast.
I believe there's a Flash-based Zune right around the corner - perhaps coming out this summer - but I wouldn't expect a second generation hard-drive based player to show up until holiday 2007.