Microsoft takes on iPod

Microsoft's wireless-enabled Zune lets music lovers swap songs. Too bad Microsoft does better with the hardware than with the software.

By Peter Lewis, Fortune senior editor

(Fortune Magazine) -- Microsoft has finally presented a challenger to Apple's ubiquitous iPod digital music players. It's bigger and heavier and more difficult to use.

But the 30-gigabyte, one-size-fits-all Zune, which is due to hit stores this month priced at about $250, was actually invented in Redmond, Wash., and for that reason Apple (Charts) should be quaking in its designed-in-California boots, even though it owns the digital music business.

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Zune vs. iPod launchMore
ZUNE SPECS
Features
Ability to send songs and pictures to other Zune users. FM transmitter lets users tune in to local radio stations.
Price and Availability
$249.99. In stores Nov. 14.
Colors
Available in black, white or brown.
Capacity
30 GB - Up to 7,500 songs, 25,000 pictures or 100 hours of video.

By the time Microsoft (Charts) figured out that this Internet thing might be more than a fad, it was hopelessly behind Netscape. By the time Microsoft realized that video games were a multibillion-dollar business, Sony's (Charts) PlayStation appeared unbeatable. Microsoft typically arrives late - in this case five years after the iPod's debut - but then grinds away relentlessly.

Can the Microsoft Zune do to Apple what Microsoft has done unto others? Let's say this: I know the iPod. The iPod is a friend of mine. And the Zune, which, by the way, comes in white and black as well as brown, is no iPod.

It's actually more than an iPod. Or at least it has the potential to be. My guess is that if Microsoft figures out how to write software as well as Apple does, Zune 2.0 will be a serious iPod challenger.

The Zune has several features - an integrated FM tuner, a bigger screen, wireless Zune-to-Zune song sharing and a circular navigation pad that is easier to use than the one on the iPod, to name a few - that iPod owners will envy.

But it also has some features that are annoying or that just don't work. While the Zune's display is better for watching videos, the Zune Marketplace - Microsoft's counterpart to the iTunes Store - doesn't sell videos, let alone movies or audiobooks or games.

With an iPod, sharing songs typically means sharing earwax. The Zune wirelessly scans its neighborhood (within 30 feet) for other Zunes and can then share songs and digital photos with them. However, the Zune's Wi-Fi is crippled so that it doesn't connect to your PC or to the Internet.

The Zune also imposes confusing restrictions on songs you want to share: In general they can be shared for three days or three plays, whichever comes first (MP3 files are not restricted). In my tests, though, about half the songs I bought from the Marketplace - for 79 "Microsoft points" each, the equivalent of 99 cents - were blocked from sharing.

Adding to the confusion, I ripped my own CD of Radiohead's "Hail to the Thief" and tried to transfer it to the Zune, but half the files were hung in limbo with the warning "conversion required."

Even though Microsoft is a software company and had five years to study the elegant way that iPods synchronize with the Apple iTunes music store, Zune software and the Zune Marketplace are more Kazakhstan than Cupertino. But Microsoft says that this is just the first of many models, so stay zuned, er, tuned.

Teeny Tiny Tunes

Apple's newest iPod, the miniaturized Shuffle, has finally reached stores just in time for the holidays. The price is right - $79 for this little one-gigabyte ditty, which can hold 240 songs in a package the size of a matchbook. The question is, Does it put out a big enough sound for a rousing workout at the health club? The answer, loud and clear, is yes, and the built-in clip is great for active listeners. If both your musical appetite and your budget are much larger, the iPod Mini is a better, more rugged choice. But you won't suffer as much if you lose the Shuffle.

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