By now you've had time to digest the Apple fall Ipod line and taken a look at both the solid improvements to Itunes and the "teased" iTV device. Microsoft finally had the coming out party for Zune, the response to Itunes and the Ipod. This was a mixed offering, a very strong music oriented product but a player that both seemed too large and clunky and optimized for a video service that doesn't exist yet. For Microsoft, of late, it seems they are always one step short of success, and, in this case it was hardware where they fell short. Real Networks did an end run and appears to have caught both blindsided making for a very interesting time in the tech industry.

Let's take a look at how these vendors stack up and at what the long term problem with the segment may be.

Apple ITV: What Media Center Should have Been

For some time now I've been trying to point out that the existing Microsoft Media Center is wrong headed and what was needed was a more appliance like device. Something that blended the capabilities of Tivo, Sonos and Kaleidescape would appear to be the ideal that could open this market up.

While the ITV "tease" didn't go far enough for us to confirm it meets the ideal of such a device, the product looks damn close and will likely open this segment up in any case. The big question has to do with the DRM penalties the device carries. This is, by the way, what limits the opportunities for the new, otherwise stunning, Tivo Series 3. We'll come back to the DRM issues shortly.

The other parts of Apple's recent announcement weren't as compelling as I'd hoped. They really needed more than one Studio (Disney is the most important but you need at least 2 to make this work) and an Ipod with a Panoramic screen and longer battery life (portable DVD players now have up to 10 hours of movie battery life) to live up to the promise they made prior to the launch. I believe that Apple does not meet those expectations. If the market is saturated by Ipods, I just don't think the new device will be a catalyst to cause a major replacement cycle with current Ipod users and that could be painful in a quarter where flat panel TVs will likely eat up most of the available consumer electronics budgets.

Competitively Apple is in good shape. Increasingly, however, they are competing with older Apple products for revenue growth which is a common problem with dominant vendors (like Microsoft will have with Vista).

Zune: Its power may be in its future

What Microsoft has created with Zune is basically a company within a company. Modeled after the Xbox group and with some of the same employees the company is largely made up of folks from the music industry. This will allow them, and this is clearly where Microsoft is making solid progress, to embrace musicians and labels very aggressively because they have intimate knowledge of those labels.

The downside is that the game business and the music business have distinct differences. In gaming there is a very close connection to the hardware both for PC and console game types. But for music, there is almost no connection. Even though electronic tools are used to create, modify and enhance music, music players can range from analog to digital and there is a hard break between the players and the content that goes in them. That is why the devices that play music today are at more than an arm's length from the devices that create music. This is the cause for Microsoft missing so badly on the Zune music player: They simply don't get the importance of hardware yet; they talk as if they do, but they don't feel it in their bones like someone from Sony, Toshiba, or Apple would.

If they can get the device right, the service looks very interesting. With sharing and a social network at the core it is clearly differentiated (whether the market likes the differentiation is yet to be seen but, at least, they didn't just copy Itunes).

The currently fastest growing service is Emusic. And its claim to fame is no DRM, but they live with independent musicians as well. Microsoft seems to be trying to create a service with the benefits of Emusic and Itunes in one service, which could be very interesting, but they live or die on the device and, to paraphrase a John F. Kennedy vs. Dan Quale saying, "I've seen the Ipod and the Zune player is no Ipod".