Could a "free" Zune compete against iPod?

Think about this. What if Microsoft gave Zunes away, the same way phone companies give away cell phones, and collected their money from the Zune Pass all-you-can-eat subscription program instead? You'd sign up for a one- or two-year contract for the service and get the hardware thrown in. That's the idea posted over at Wired where Jason Reindorp, marketing director for Zune, is basically quoted saying it's an idea that Microsoft has been kicking around.

Could a cheaper-made (perhaps flash-based) Zune swing the deal? Would it put Zune on a footing to compete with the iPod monolith? It certainly opens new possibilities.