Micorosft's music player has always been an also-ran, a late-to-market entry which mimicked the iPod but offered no new features consumers found compelling. Interviewed at the Consumer Electronics Show in Las Vegas, Ballmer backed into an admission of failure:

In digital music, meanwhile, Mr Ballmer seemed all but ready to throw in the towel on the Zune mobile device, which has failed to gain ground on Apple’s iPod. But he suggested that the focus of competition in digital media was moving onto ground that Microsoft understands well: software.

He said that, with the market for dedicated portable media players in decline, the future lay in more “general purpose” devices – such as Apple’s iPhone and touch.

Asked if Microsoft would counter with a “Zune Phone”, Mr Ballmer said: “You should not anticipate that.”

Great advice, Steve! As if anyone — aside from the media, which loves a good fight — was ever anticipating more Zune products. Even Steven Smith, the fellow who infamously tattooed himself with three Zune logos, has switched to an iPod.

So what has Microsoft "learned" in its "long journey"? Well, it's back to making software, largely for cell phones, which other manufacturers will then deliver to consumer — the model it knows so well from PCs. But that's also the same finger-pointing business model which led it to abject failure in the music-player market before it started a crash program to create the Zune. And a recent glitch which rendered a popular Zune model dead on New Year's hardly furthers the notion of Microsoft being strong in software.

How funny that Microsoft executives think its technical strategy is what needs to change, when the real problem is that the Microsoft brand is far too stodgy to succeed in an image-driven business like music. That's the kind of cluelessness that leads to one failed campaign after another — like a wannabe politician who just can't grasp the idea that no one wants to vote for him.

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We think some folks in the industry were expressing hopes for how the entire industry, not just Microsoft, would come to look at content distribution, and some speculation has ensued.

Microsoft spokesman Adam Sohn did tell Saul Hansell, who wrote the original New York Times article, that the companies had agreed to research filtering technology. Meanwhile, while Zune users will have to pay for downloads of 30 Rock and The Office, iPhone users can watch those shows for free. In other words, still no good reason to buy a Zune. (Illustration by Guy K)

The irony here: Before partnering with RealNetworks, MTV ran a music service, Urge, in partnership with Microsoft — which is now trying to buy Yahoo. Timing is everything. We look forward to the introduction of purple Zunes.

In short, there's no loss of brand equity here for Microsoft. The new label suggests that devices and music stores are merely compatible with Windows — the real butter on Microsoft's bread. And even though the stores and players will likely work just as well with Windows XP, Microsoft has just tricked its music partners into giving free advertising to its newer, unloved operating system.

"Um, yeah, currently two Zunes in the top 25 electronics bestsellers on Amazon. Nine iPods." Deathbychici also points out that while Microsoft's heavily discounted $89 30GB model is currently outselling each of the various nine iPod models, different colors of the iPod Nano are outselling the regularly-priced Zune. Ouch.

(Photo by S Baker)

Yesterday morning, according to the almost certainly biased Puget Sound Business Journal, Microsoft's 30-gigabyte $134 Zune held the number one spot, followed by the iPod Nano and Apple's 80GB iPod. Leave it to Microsoft to blow the their chance at taking a bigger lead, though. Microsoft didn't manufacture enough 80GB Zunes and now they won't be availabe on Amazon until "early December." (Photo by S Baker)

When it ties that same back-end service into cell phones — maybe those running Windows Mobile? — it would be capable of serving media to basically any device. With this distribution network, content providers would simply hand over Microsoft the source material, the way they send film reels to theaters, and Allard's division would be responsible for distributing it. The one problem with this idea? Hollywood trusts Microsoft about as far as it can throw it.