After the Vista debacle, Microsoft changed the way it makes software. The result – Windows 7 – is winning raves. Can a new operating system (and a new attitude) help the company take on Google?

Microsoft

The company’s web forays, such as MSN, have only highlighted the dominance of Google and Yahoo. In software for smartphones, there is Apple, RIM (RIMM), and everybody else. MP3 players? Microsoft’s Zune hardly merits a mention. And even the core franchise has suffered. In the face of slowing PC sales and the economic pall, Microsoft’s fiscal 2009 revenue actually contracted, to $58.4 billion from more than $60 billion in fiscal 2008 — and the company missed its earnings estimate by more than $1 billion.

But the biggest failure under Ballmer’s tenure was self-inflicted. Vista was meant to be a wholesale reimagining of Windows, the brand name for Microsoft’s operating systems dating back to the early 1980s. Every so often the company unveils a new OS, blandly named for the year of the release (Windows 95, Windows 98) or a geeky abbreviation (Windows XP is short for Windows Experience). Vista had a marketing-friendly moniker, a fancy user interface, new security architecture, a better file-storage system, and much more.

After a protracted six-year development process, much internal squabbling, false starts, blown deadlines, and broken promises to partners, the engineering team mopped up 50 million lines of code, wrung it all out into a shrink-wrapped box, and heaved it onto the world in early 2007.

The timing couldn’t have been worse. Vista required top-end hardware to operate even while users were downgrading from desktops to notebooks. The bloated OS was incompatible with printers, web cams, and device drivers of all sorts. Early adopters scurried back to Windows XP; many corporations skipped the upgrade altogether. Worst of all, Vista energized the cloud computing chorus, led by Google (GOOG), whose vision of the future involves ubiquitous broadband, a good web browser, and everything else hosted on the Internet. No sophisticated operating system necessary. “Vista was the biggest debacle in the history of the company,” says one former senior executive. “People were ashamed to say they worked on it.”

But here’s some good news: On Oct. 22 Vista will be safely behind Microsoft (MSFT). On that day, the company will introduce a successor, Windows 7, and guess what? It doesn’t suck. In fact, it’s really pretty good. For all the pomp around each new version of the iPhone, the latest Kindle, or Google’s next beta, Wave, Windows 7 is sure to go down as the technology launch of the year. Critics love it, and IT managers are ready to buy. A recent Credit Suisse survey says that a quarter of corporate customers plan to upgrade within two years. Analysts estimate that the new OS could boost Microsoft’s revenue by more than $3 billion over that time and ignite the entire ecosystem built on Windows — from computer makers like Dell and Hewlett-Packard (HPQ) to third-party software vendors, resellers, and system supporters. It could be the shot in the arm the entire tech sector has been looking for.

On a warm September day in Redmond, Wash., sitting in a conference room in Building 34, the economic epicenter of the Northwest, Ballmer is not ready to declare the doldrums over. A stock market turnaround means little in the face of staggering unemployment. But he remains hopeful because he thinks this version of Windows is a winner. “It’s a great product. We did our best. Is that going to cause huge increases in spending by the world’s businesses? I can’t make that promise,” he says, “although I think things are becoming slightly less cautious. There’s some hope that says, ‘Hey, look, maybe this is part of the turnaround.’”

Back from the abyss

It’s just a hint of optimism from an executive who has been bearish on the economy of late, an indication that the mood is shifting at one of the most self-loathing, hypercritical corporate cultures you’re ever likely to encounter. As bad as the Vista years have been, Microsoft seems to be getting its act together. The Wall Street collapse stunned the company, and management reacted with uncharacteristic alacrity. “There was a week or two where everything seemed to come to a stop,” says CFO Chris Liddell, “and we said, ‘We’re going to have to operate in a different way.’ “The company laid off 5,000 employees and instituted a “10-point plan” to cut wasteful spending, from vendor allotments to travel and entertainment.

Meanwhile, executives ramped up development cycles. This past summer the company kicked off, in its words, “a year of product launches unlike any other in Microsoft history.” Since then, Ballmer et al. have revamped Windows Server and unveiled the Zune HD line of MP3 players. On the way: overhauls of Windows Mobile, Office, Internet Explorer, Xbox Live, Bing (its new search engine), and the introduction of Azure, a plunge into the enemy territory of cloud computing. Microsoft is also about to venture into retailing, an area conquered by longtime nemesis Apple (AAPL).

All this, says Bob Muglia, president of the server and tools division, is part of what he calls Microsoft v.3 — a play on the old saw that it takes the company three releases to get a product right. “In the Vista era, we lost track of a bunch of things,” he says. “Now Windows 7 has shipped, and it’s the official start of [a time of] mature leadership, competitive focus, aggressive competition — and I think you see the results. You could say it’s us getting our mojo back.”

If Steve Ballmer has one attribute of a great leader, it’s an ability to inspire the troops — which is what he’s about to do standing onstage in July at a convention center in downtown New Orleans. The Big Easy is broiling in a midsummer haze. The locals have cleared out, making way for the 5,000 Microsoft partners — resellers, builders, software developers — who have gathered at a conference organized in their honor. Ballmer is, naturally, the headline act. He’s peeled off some pretty outlandish keynotes over the years, including “Steve Ballmer Going Crazy” (2 million views on You- Tube) — in which he huffs, “Come on, give it up for me!” — and the much-remixed “Developers” (1 million-plus views), where a heavier Ballmer performs a sweaty, arrhythmic stomp dance.

Today job one is to inject some optimism into the crowd. Ballmer had a tough year. He took a modest (for a man worth $11 billion) pay cut. But his small-business partners are reeling from the downturn. “This is the most phenomenal year we’ve ever had for technology releases,” he rumbles, ticking off reasons to be hopeful about 2010. Microsoft vows to keep investing $9 billion-plus in R&D, it’ll increase spending on partner support, and most of all it will keep fighting competitors — because, well, that’s what the company does best. “We don’t go home,” he says. “We just keep coming and coming and coming. We’re tenacious, tenacious, tenacious. Boom!”

That’s not entirely true. Over the years the company has cowered at least a few times. It bailed on Microsoft Money (a personal finance product designed to oust Quicken), would-be YouTube killer Soapbox, the long-forgotten BOB operating system for kids, tablet PCs, web-enabled TVs, etc. But the company has surely disrupted many markets — from web browsers to console games — by offering a fresh perspective. “Novell said, ‘The world is about single purpose operating systems,’ ” explains Ballmer, back at Building 34.”We had to say, ‘No, the world is really about multiple-purpose operating systems.’ Lotus and WordPerfect said, ‘The world is character-based,’ and we said, ‘No, let’s try some graphics.’ Apple said, ‘The world is a proprietary software-hardware combination,’ and we said, ‘No, the world needs to be open to choice.’”

The enemy within

Such conquests, while dated, have earned the company a reputation for being obsessed with competitors — a characterization Ballmer does little to diminish. Unlike most executives of his ilk, he says what’s on his mind, which can include calling Google a “house of cards” or referring to Linux as a “cancer that … attaches itself to everything it touches.” He once laughed derisively on camera at the prospect of the iPhone ever succeeding. But in Microsoft’s core business, there is no real competition. Various versions of Windows run more than 95% of all PCs. So when it came to preventing another Vista, Ballmer had to find the enemy within.

Windows 7 is a departure from Vista in many ways. It will be unveiled on time after a three-year development cycle. It’s compatible with previous versions and has excised all the security-permissions protocols that were lampooned in Apple’s “I’m a Mac” ad campaign. It’s sharp-looking, almost as sleek as the Mac OS, and has a few cool new features, like support for multitouch monitors and Aero Shake, which allows users to clear the desktop with a jiggle of the mouse. Perhaps most impressively, it requires less computing horsepower than Vista. That just never happens with a new OS. But the biggest departure comes in scope and ambition. Ballmer claims to have learned something from Vista: It’s no longer advisable to try a “big bang” rollout — i.e., completely reimagine a product as sophisticated and interconnected as Windows.

So he hit control-alt-delete. He brought in a new taskmaster, Steven Sinofsky, to oversee the engineering. Sinofsky became known for hitting deadlines while overseeing the Office group from 2000–07. An executive close to the Windows team characterizes his changes as such: “Reset — or reboot — is something that we hear a lot about the transition,” he says. “What we did was [give] the development team a clarity that was probably missing.” With Vista, teams worked on features simultaneously without an awareness of other schedules. When separate features came together, they were often incompatible. “The goal was to produce a plan for features, but not just a plan — also the motivation, the business rationale,” the executive says.

Sinofsky oversaw the largest beta test in history — more than 8 million users — blogged tirelessly about every little tweak, and kept lines open with partners. The team scrubbed inefficiencies and ushered out a fully functional, backward-compatible OS on time, earning Sinofsky a promotion to president of the Windows division. The new openness has resonated in the marketplace. According to Credit Suisse, 58% of corporate customers were either dissatisfied or extremely dissatisfied with Vista. With Windows 7, it’s 21% dissatisfied and none extremely dissatisfied. The PC makers seem happy too. “With Vista, the expectations were very high, and the customer reaction was not so positive,” says Satjiv Chahil, senior VP of global marketing for HP’s Personal Systems Group. “This time the response has been very positive. It’s what the market has been waiting for.” In the end Windows 7 is what Vista should have been the first time.

Software fades

With its house in order, Microsoft can safely get back to its imperialistic ways. And there’s no bigger land grab than web search. Ballmer has pledged to fund his new search engine, Bing, with as much as 10% of operating income over the next five years (potentially $11 billion). Why do something so risky when he’s lost so much online already? Because the opportunity is simply too big to ignore. Microsoft considers the global search market to be worth as much as $80 billion. And Ballmer recognizes that there’s even more power than money in being the leader. Google.com is what Windows used to be: leverage. Controlling the on-ramp to the web allows a company to distribute a broad array of products, which is what Google does so effectively. “They promote YouTube, they promote Chrome,” he says, referring to Google’s web browser. “If it was us, people would call it an unfair advantage.”

As the importance of client software diminishes, so too does Microsoft as we know it. Bing represents the company’s best hope yet of maintaining its own unfair advantage. And Ballmer thinks that Google, despite its enormous market share, is vulnerable. “There are a lot of negative views right now of what’s going on — Google Books, monopolization, blah, blah, blah,” he says, simultaneously highlighting and waving away a growing anti- Google sentiment. “Put all that aside and you have to ask, ‘Has the experience really changed much? Is it easier to find what you’re looking for? Is there a chance to do a better job?’ I think there’s a real opportunity to do that, and somebody had better seize it. Who’s got the best shot?”

Microsoft launched Bing in May, and it confirms Muglia’s assertion that the company has become more focused on customers. Rather than Google’s minimalist homepage, Bing rotates stunning photos embedded with interesting snippets about various parts of the globe. Like Google, the site acts as a jumping-off point, but has just enough flair to make you want to linger. Visitors see more information than they do in Google results and can even play videos without clicking away. Bing is organized more intuitively, and it outperforms in real-time search — a big plus for the Twitter set.

Early returns have been promising. Before Bing, Microsoft’s search engine, Live Search, had 8% of the market, according to ComScore. After three months Bing stands at 9.3%; meanwhile, Google’s share has dropped 0.4%. Over the summer Microsoft struck a deal for Bing to power the search function across many Yahoo (YHOO) properties. Once the arrangement kicks in, Bing’s share could jump to around 30%. “It’s a pretty good start,” says Yusuf Mehdi, SVP of Microsoft’s online audience group. “Best of all, it’s really hot with certain demographics, like elementary school children and women, because of the aesthetic design and feel.”

Of course the hope is that greater traffic will lure advertisers. Craig Macdonald is the chief marketing officer at media-buying firm Covario. He spends $250 million a year on search ads for clients like McAfee, Intel (INTC), and Procter & Gamble. Impressed with Bing’s aesthetic and buzz, he initially increased spending, but has been disappointed. “We saw a 15% to 20% increase in impressions but a 39% spike in the cost of acquisition,” he says. Compared with Live Search traffic, driven primarily from the MSN homepage, Bing users are younger, more web-savvy, and frugal. “They did a nice job creating buzz, but we said, ‘We’re pulling back.’ “

Microsoft may yet benefit from the anti-Google sentiment that Ballmer calls out. No one likes a monopoly, and everyone’s favorite web brand has become a freeloader in the eyes of the telecom, book, and media industries. Some of Google’s partners have grown disenchanted as well. “With Google, everything’s a black box, completely opaque. You have no idea why things go up or down. They’re impossible to deal with,” says the president of a website that each year generates more than $10 million hosting Google AdSense ads. “Everyone who’s not Google is rooting for someone to be a counterweight.”

It’s not obvious from walking around the company’s sprawling campus that Microsoft is locked in combat with some of the business world’s most ferocious competitors. There’s little resemblance here to the 24/7 sleep-under-the-desk startup culture that permeates Silicon Valley. Many executives are tanned and fit from weekend sails on Puget Sound, hiking up Mount Rainier, golfing, or exploring Machu Picchu. People arrive promptly to meetings, smile broadly, and are exceedingly polite. If quality of life were the most important metric for a recent grad deciding between Redmond and Redwood City, there really would be no choice.

Lots of stuff going on today, so here are some highlights:

Nintendo dropped the price of the Wii to $199 in the United States. John P. Falcone wrote in CNET’s Crave blog about the change, which comes hot on the heels of Sony’s cut in the Playstation 3’s price to $299, and a little farther back, Microsoft’s cut in the 120GB hard drive version of the Xbox 360. I’m guessing that will help push the three consoles through the holiday season, but I’m also thinking sales will remain slow, based on what I’ve heard.

Andrew Nusca wrote at ZDNet that Microsoft’s acquisition of Danger has yielded two Sharp-manufactured phones, the Turtle and the Pure. These are part of the so-called Pink Project. The pictures look a little like Danger’s Sidekick devices. A few days ago, Mary Jo Foley at ZDNet said Pink Project phones will use a version of Windows Mobile 7 and will be able to use the Zune music store.

Yesterday, Jonathan sent me this post from Ian Paul at PC World that talks about the Microsoft Courier tablet computer. It looks cool from the picture, but it’s just a prototype, Paul said, so don’t get excited about this specific design until it actually ships. Are devices like Amazon’s Kindle and netbooks finally igniting the market for tablets? Multitouch technology is certainly helping. Paul reported that the Courier would support it. And of course, there are rumors that Apple will jump into the fray.

Speaking of e-books, BusinessWeek said yesterday that Verizon has announced its support for a new reader from iRex. That means they’re going to take on Sprint Nextel, which provides WiFi for the Kindle and AT&T, which will power the Sony Reader and Plastic Logic ebook readers. As for the catalog, the iRex reader will use Barnes & Noble’s store. The New York Times’ Brad Stone said that iRex was spun off from Royal Philips Electronics. Also interesting to note, the iRex and Sony e-books will be sold in Best Buy stores.

By the way, it’s got an 8.1-inch screen, which puts it in between the different versions of the Kindle in terms of size.

OK, that’s enough for now, but I’ve already spotted some more tidbits that may interest you. If you’re ready to learn more about some of these topics, you can do that at HowStuffWorks.com:

How Microsoft Works
How do touch-screen monitors know where you’re touching?
How the Amazon Kindle Works

Why have Microsoft’s Zune media players failed to make even the tiniest of dents in the iPod’s market dominance? There are multiple reasons, but one stands out: They’ve been stuck in a hopeless game of catch-up, and they’re always way, way behind.

The original Zune was a hard disk player that debuted in 2006–right when Apple’s flash-based iPod Nano was becoming the world’s best-selling MP3 player. In 2007, Microsoft announced Nano-like Zunes that used flash storage–a couple of months after Apple shipped the sexier touch-screen iPod Touch. And now Microsoft is releasing the Zune HD, a touch-screen model, but one without the awesome power of the iPhone/iPod Touch App Store. To riff on the famous Wayne Gretzky quote, Microsoft is like a hockey player who keeps skating to where the puck was…not to where it is right now, and certainly not to where it will be.

But wait. The Zune HD may be a mere media player, but it’s anything but a retread. It packs worthwhile technologies that no iPod does, such as an OLED screen and HD output. It’s very much its own device in terms of industrial design and user interface, both of which are nicely done. In short, the Zune HD is cool in ways that no previous Zune has been. And even though the HD has its share of imperfections and limitations, it’s easy to imagine some folks preferring it to any media player that hails from Cupertino.

Sizewise, the new Zune is noticeably more pocketable than the iPod Touch and its soulmate, the iPhone–it’s a midsized gizmo, in an aluminum-and-plastic case that fits your hand easily and looks good in it. (The jokes about the homely brown Zune can end now.) Here it is flanked by the new iPod Nano and an iPhone 3GS:

Naturally, a noticeably smaller player is going to have a noticeably smaller screen: The Zune’s is 3.3″, vs. the 3.5″ display on the Touch. The difference is more striking than those two numbers suggest: The screen is plenty big enough for tasks like managing audio and video, but movies feel less expansive than on the Touch, and the on-screen keyboard requires that you tap with more precision. Some folks are bashing the HD for its lack of the Touch’s embarrassment of app riches, but even if it could magically run all 70,000-odd iPhone OS apps, it wouldn’t run many of them very well–the screen is too little.

Which is not to say that the 480-by-272 pixel screen looks bad. The OLED display boasts vivid, bright colors; it’s not a total revelation compared to the LCD on my iPhone 3GS, but it’s pleasing by any standard, and particularly nifty for video content. The nicest thing about it isn’t how it looks, though–it’s the multi-touch interface, which is every bit as fluid as that on the iPod Touch and iPhone. Just as with Apple’s interface, you use your fingers to scroll, tap, pinch, and pull; it’s smooth, responsive, and fun, and the fancy animated menus you use to jump from feature to feature are as intuitive as Apple’s equivalents even though they don’t look or work like them. And there are nice touches like QuickPlay, a feature that lets you pin just about any item you can experience via the Zune to a home page for instant access later.

As a music player, the most interesting thing about the Zune HD is a holdover from previous Zunes: Microsoft’s Zune Pass subscription service. For $14.99 a month, you get full access to Microsoft’s entire catalog of music; you can download albums and tracks directly to the HD, via its built-in Wi-Fi, or download them to a PC first and then sync them to the Zune via USB cable or Wi-Fi. You can also stream unlimited music in your Web browser (even if that browser is on a Mac–a platform which Zune doesn’t otherwise support).

Of course, when you subscribe to a music service you’re renting, not buying: If you cancel your Zune Pass subscription, all this music goes away. But in an obvious response to the utter domination of iTunes’ pay-per-track pricing, your fifteen bucks also lets you download ten DRM-free MP3s a month that are yours to keep and will play even if you dump your Microsoft audio player for a competitor.

Consumers have consistently failed to show much enthusiasm for subscription music plans, so it’s possible that real people won’t find Zune Pass a significant point in the HD’s favor. Then again, the HD is probably the best subscription-music player ever; it may help subscription music’s cause simply by being a device that people want.

If you still don’t want to commit to Zune Pass, you can buy songs a la carte from the Zune Marketplace, as you would from iTunes. (Microsoft continues to needlessly complicate matters by pricing everything in Microsoft Points, which are worth 1.25 cents apiece in real-world currency, and which you buy in blocks.) Or you can rip songs from CD using the Zune software. Or listen to the player’s built-in HD radio receiver, which provides static-free reception and extra variant versions of some stations, and lets you tag songs for later purchase. (Too bad the radio doesn’t offer the new iPod Nano’s TiVo-like pausing and rewinding of live radio.)

When the first Zune showed up back in 2006, one of its biggest differentiating points compared to the iPod was supposed to be the Social, its social-networking features. They’re still there, letting you share music and recommendations with your Zune-using pals (assuming you have any–but perhaps the Zune HD will sell well enough that Zune fans won’t feel so lonely). In 2009, the Social feels a tad long in the tooth: It’s a separate menu on the Zune and in the device’s PC software, and even if you have Zune-loving friends, it’s too hard to find them. You have to enter their “Zune Tag” nicknames or e-mail addresses one by one; it would be way easier if the Social, like other social networks, could scan your e-mail address books and lists of friends for folks who are already using it.

Then there’s video. Like I said, movies and TV shows look good (although small) on the OLED display. Invest in the optional $89.99 AV dock, and you can connect a Zune HD to your TV via the included HDMI or component cable and use a remote control and menus on your TV’s screen to control it–it makes the Zune feel a bit like a tiny Media Center PC. The Zune outputs video in the 720p resolution that helps to give the it the “HD” part of its name; the dock also lets you listen to music from your collection or the HD tuner. High-def content looked crisp and eye-catching on my 42-inch LCD HDTV–at a distance, I’d mistake it for the HD I get via cable–and even standard-def video was presentable.

But for video, the Zune is hobbled by the so-so state of Microsoft’s video store. The Zune Marketplace offers movies (for purchase and rental) and TV shows (for purchase) in standard- and high-definition. (I’m sorry to say that they too are priced in those dreaded Microsoft Points.) As with iPods, you buy and download video for the Zune via its PC software, then sync it over to the player; it’s also possible to buy or rent content for viewing on a PC, but if you choose Zune versions you can’t watch them on your computer.

The big problem with the Marketplace’s video offerings is selection, or lack thereof. It doesn’t compare with the iTunes lineup–it’s a limited, scattershot assortment of new and older titles, and major chunks of what you might want to watch are missing, such as Disney releases). Even when the Marketplace did offer a particular title, I had trouble finding it: Searches I did for film titles didn’t pull up anything even when the items in question were there.

Microsoft says it’s working to offer a more comprehensive unified collection of video for Zunes and the XBox 360, and to let you pay for content once and watch it on both platforms.  For now, the Zune Marketplace’s skimpy video offerings may be a bigger disappointment than the Zune’s lack of a true application store, given that HD video is one of the device’s primary selling points. (The player supports video in the WMV, H.264, and MPEG4 formats, and I suspect that many owners will end up acquiring most of the stuff they watch from sources other than Microsoft.)

Speaking of apps: The Marketplace does have a section for them, but the Zune HD is launching with only nine programs (a weather app, a calculator, and seven games) versus the tens of thousands that run on the iPod Touch. Microsoft says it’ll bring more free software to the Zune (including clients for Facebook and Twitter in November, plus more games). But it has no concrete plans to let third-party developers write and distribute apps.

Of course, you can get to Facebook and Twitter and a whole lot more right now via the Zune’s Web browser. It does a more than respectable job of squishing sites to fit on its screen;  just as on the iPod touch, you can zoom in by dragging with your fingertips, and the Zune’s accelerometer adjusts the browser to landscape and portrait mode on the fly. Overall, though, it’s much more bare-bones than Apple’s Mobile Safari: It lacks that browser’s tab-like support for multiple pages, doesn’t autocorrect or autoremember anything you type, and can’t handle embedded YouTube clips. And while many sites deliver optimized versions to the iPhone and Touch, the Zune tends to get generic mobile versions. (The version of Gmail for iPhone OS is amazing; the one you get on the Zune HD is surprisingly crude.) Assuming that Microsoft releases a software update for the Zune in the coming months, job one should be to beef up the browser.

The Bottom Line

From a hardware standpoint, the Zune HD is terrific. Other than the too-basic browser, its software is generally impressive. It’s the service side of things where things get complicated: Zune Pass remains an excellent deal, but the Zune’s video store is a disappointment, and its app store is a non-entity. The best thing about Apple’s iPod/iTunes platform is that it’s a beautifully integrated system; for all the major advances of the Zune HD compared to earlier Zunes, it remains a laggard on that front.

Should you consider buying a Zune HD? Absolutely, if the hardware design appeals to you and you like the idea of feasting on music for fifteen bucks a month. The video features are another major attraction if you plan to supply your own content from (ahem) ripped DVDs or other sources rather depending on Microsoft’s offerings. But the HD isn’t a pocket-sized computer like the iPod Touch–as I said at the start of this review, it’s a mere media player, albeit a (mostly) neat one.

And despite all the time in this review and elsewhere contrasting the  Zune with the Touch, that leaves me thinking that the HD’s most direct competitor is not the touch-screen iPod but the new Nano. For $40 more than the 16GB Nano, the $219 16GB Zune HD gives you a bigger and better screen, a much slicker interface, HD radio, HD video output, direct access to content and wireless syncing via Wi-Fi, basic Web browsing, and the subscription music option. Yes, you give up Nano features such as the video camera, pedometer, much better video store, and Mac compatibility. But if I were buying a portable gadget today mostly to listen to music, I’d probably spring for the Zune over the Nano and sign up for a Zune Pass.

What’s next for Zune? Your guess is as good as mine, but I hope that this model sells well enough to end the ongoing speculation over whether the brand is toast. It’s the first genuinely interesting media player from Microsoft, and if the company develops it rather than mimicking last year’s iPod, the name “Zune” just might stop sounding like a punchline to a bad joke about Microsoft’s inability to compete with Apple in digital entertainment.

Over at Wired News, Brian X. Chen has posted what’s probably not the only article we’ll see in the next few days that juxtaposes the words “Zune” and “failure.” Brian talked to a bunch of Microsoft-watchers, and the gist of their consensus is that the fact that the Zune isn’t a true software platform sets it up to bomb.

I don’t agree that it’s destined to tank–I’m guessing that Microsoft would be thrilled if it sold half as many Zune HDs as Apple sells iPod Nanos, and the Nano is even less of a software platform than the Zune. But yes, the iPod Touch is core to Apple’s future, and there’s no way that the Zune in its current form is core to Microsoft’s fate. Even in a best-case scenario, it’ll just be a neat media player that sells well.

(Speaking of the Nano, MKM Partners’ Tero Kuittinen has an interesting suggestion for Microsoft in Brian’s story: Lower the price of the Zune HD so it’s a cooler, more powerful alternative to the Nano rather than a more limited iPod Touch rival.)

Anyhow, I bring this up mostly because I’m interested in what you think…

Today is September 15th and it’s the introduction of Microsoft’s Zune HD portable media player. If features wireless synching, HD radio, video, multitouch technology, web browsing and games. It doesn’t play HD videos because the screen is not of an HD resolution. It does play 720p video on your TV via a dock. Such a beautiful device. Will it live up to all the hype?

It’s my instinct as a writer of stuff about technology to compare Microsoft’s new Zune HD against Apple’s iPod Touch. But the more I’ve played with the Zune, the less it feels like a direct competitor to the Touch: It has a number of features that the Touch doesn’t (HD output, HD radio, an OLED screen), a significantly different form factor (much smaller), and is missing the Touch’s single most interesting feature (support for tens of thousands of third-party apps). The Zune has no direct Apple counterpart–it feels a little like an iPod Nano in some respects, like the Touch in others, and is ultimately its own unique beast.

But like I say, my impulse is to compare the Zune HD to the Touch. So here’s a first pass at a T-Grid comparing the two devices’ specs and features. If all you care about is media playback, the Zune looks like a strong competitor–but stick around until the end of the grid.

This T-Grid is a work in progress, subject to expansion and revision:

The devices	Microsoft Zune HD	Apple iPod Touch
Availability	Now	Now
Price	$219 (16GB); $289 (32GB)	$199 (8GB); $299 (32GB); $399 (64GB)
Colors available	Black, platinum, green, blue, red	One–black/silver
Dimensions and weight	4″ by 2.7″ by .35″; 2.6 ounces	4.3″ by 2.4″ by .33″; 4.05 ounces
CPU	Nvidia Tegra	Samsung ARM
Screen size and technology	3.3″, OLED	3.5″, LCD
Screen resolution	480 by 272	480 by 320
Video output	720p with optional dock	480p and 576p with optional cable
Multi-touch	Yes	Yes
Battery life	Microsoft says up to 33 hours for music, up to 8.5 hours for video.	Apple says up to 30 hours for music, up to 6 hours for video.
Accelerometer	Yes	Yes
Radio	Yes, HD	No
Camera	No	No
GPS	No	No
Wi-Fi	802.11 b/g	802.11 b/g
Per-track music downloads	Yes	Yes
Subscription music	Yes (Zune Pass)	Not from Apple, but Rhapsody offers it
Movie purchases and rentals	Yes	Yes
TV show purchases	Yes	Yes
Audio formats	Windows Media, WMA Lossless, AAC (no FairPlay), MP3	AAC (including FairPlay), MP3, Apple Lossless, WAV
Video formats	WMV, H.264, MPEG4	H.264, MPEG4
Audible audiobooks	Other Zunes support them, but I’m not finding evidence that the Zune HD does	Yes
Photos	Yes	Yes
Web browser	Yes	Yes
E-mail	No	Yes
Instant Messaging	Not yet	Via numerous third-party clients
Calendar	No	Yes
Maps	No	Yes
Facebook and Twitter	No, but due in November	Yes
Apps available	9	75,000
Games available	7	21,000

(UPDATE: This isn’t a Zune review, but now I’ve written one–here it is.)

Microsoft’s Zune HD–the first touch-screen version of the company’s non-iPod-killing media player–goes on sale today. I’ve been playing with one loaned to me by Microsoft, along with the new Zune 4.0 software, and am itching to review it. I can’t yet, though–the Zune Marketplace service still seems to be down, and it’s impossible to judge most of the features that are at the heart of the new Zune without snagging audio and video content from Microsoft’s store.

It’s not too early to share some initial thoughts based on the hands-on I’ve had with the features that are up and running. Such as…

The Zune HD feels small. I mean that mostly as a compliment, it’s noticeably less of a pocket-hog than my iPhone, which is suddenly feeling a tad bulky. Fits in the hand well, too.

The screen’s also smallish, but attractive. It’s 3.3″ with 480 by 272 pixels compared to the iPhone (and iPod Touch’s) 3.5″ screen with 480 by 320 pixels. So far, the reduced inchage and loss of pixels are only an issue in the Web browser–the Zune isn’t as good as an iPhone or Touch for reading more than a paragraph or two of Web content at a time. I want to watch video from the Zune Marketplace before rendering any verdicts on the OLED display’s overall quality.

Microsoft nailed the touch interface. It’s just as fluid and intuitive as Apple’s–unlike the clunky touch to be found on Windows Mobile phones. The user interface is more exuberant than the iPhone/Touch’s straightforward menus–items fly around in 3D space. Which sounds annoying, but it isn’t.

The browser is good, but basic. Pages render accurately; zooming works; speed over my Wi-Fi network is adequate, although it feels slower than my iPhone. It doesn’t have iPhone OS’s multiple-page manager, and typing in URLs is tricky simply because the screen is small. (The keyboard is similar to the one in the iPhone OS.)

There probably won’t be an app for that. The Zune Marketplace has an apps section, but Microsoft isn’t releasing a Zune SDK, and doesn’t plan to bulk up the store with gazillions of programs anytime soon. It does say that there will be 3D games for the Zune HD (which has powerful Nvidia graphics) and that it will be releasing Facebook and Twitter apps by November. It also says that Zune could become a meatier app platform eventually, building on work done by Microsoft’s Windows Mobile team. But for now, the Zune HD, unlike the iPod Touch, is in no way a pocket computer. It’s an audio and video player with a Web browser and a few other apps on the way.

The HD radio works. But I’m still deciding whether I prefer it to the new iPod Nano’s plain ol’ FM with TiVo-like pausing and rewinding.

I don’t like the Zune software for Windows. It seems overly complicated, with a user interface that emphasizes sizzle over straightforwardness. (iTunes has a lot of features, too, but it’s easy to ignore the ones you don’t like.)

Microsoft lost its price advantage, but the Zune is still competitive, more or less. When the Zune’s price was announced, it looked aggressively lower than that of the iPod Touch. But then Apple got aggressive–and now the 16GB Zune sells for $20 more than an 8GB Touch, and the 32GB Zune is only $10 less than a 32GB Touch. Many people will opt for the Touch given that it does so much more at generally similar prices, but if you’re interested mostly in music, movies, and the Web, the Zune is a plausible Touch alternative at a plausible price.

Like I say, I can’t review the Zune HD until I can try all its core features. But so far, mostly so good–the Zune HD seems to be well thought-out from both a hardware and software standpoint. It’s not entirely clear that the world still needs ambitious media handhelds that don’t try to be little computers and/or telephones, but if there’s still a place for them, the Zune HD looks like it’s going to provide genuine competition for Apple. This gizmo is most definitely not an iPod Touch knockoff–it’s a different kind of device with a different set of pros and cons.

More once I’ve had a chance to put the Zune HD through all of its paces…

Pink will perform at Key Arena Tuesday, September 15.

Day of Caring volunteers not only get to enjoy free food, drinks, Sea Gals and the fresh grooves of DJ Tecumseh at the Day of Caring After Party, they have the chance to win some really cool prizes. Two tickets to the September 15 Pink concert at Key Arena, a Microsoft Zune, a Holland America cruise for two and more are up for grabs.

Volunteers: be sure to wear your Day of Caring t-shirt. It’s your ticket to the After Party. If you want to partake in the free beer and wine, please bring your ID. Free parking is available in the North Lot at Qwest Field.

Thank you to the Seattle Seahawks for generously hosting the Day of Caring After Party! And thank you to the nearly 9,000 Day of Caring volunteers who will be out in the community tomorrow.

Of course!  In a totally expected move there will be new Zune software landing on the same day as the new Zune HD.  ”Exciting new features” have been promised to go along with that “exciting new Zune”.  I can’t wait, the anticipation is killing me!

Microsoft is going full-bore when it comes to the Zune HD, due out in stores September 15. Redmond apparently believes so much in the product that it is willing to axe the entire line to focus on the device, if reports from Paul Thurrott are to be believed.

Now Mr. Thurrott does not necessarily have the best track record in being accurate in predicting or reporting future Microsoft moves, but if he’s actually talking to executives you have got to think they aren’t blowing smoke. If true, it’s a pretty gutsy move on Microsoft’s park to put all their eggs in one basket.

[UPDATE: Microsoft has now confirmed that the original Zunes are dead. See this PC World story.]

Even though Apple seems to be focusing on touch as of late, the company still carries an expansive line of models to suit users tastes. Simply put, a one-size-fits-all approach doesn’t work well in this market.

Apple’s Shuffles and Nanos work good for athletes — look no further than the Nike+ add-on for the Nano as evidence. For Microsoft, the Zune 8 fufilled this niche. With it gone, the company is forcing users to upgrade to the much larger (and about 2 1/2 times more expensive) touch-based model.

In Microsoft’s defense, we all shouldn’t forget though how much ground the Zune needs to make up. Even though this latest round of Zunes sold slightly better, there is still a 20-25:1 ratio of iPods sold to every Zune  Microsoft is focusing its efforts where the market is going.

Regardless, a large portion of the market will be underserved. Many consumers prefer smaller and cheaper players (anecdotal evidence seems to indicate this may be a fairly large chunk of all players sold). I can understand Microsoft’s desire to focus on the Zune HD, but deciding to axe the rest of your product line before you have any alternatives seems way too risky for a platform that is hanging on by a thread so as it is.

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Boy meets girl. Boy falls in love. Girl doesn’t.
Went to the preview of this film courtesty of Movies.ie on Tuesday evening in Cineworld. It’s billed as a romantic comedy and although it does have comic moments, I felt it was more dark dealing with the story of unrequited love and heartbreak. If you’re expecting a light-hearted romantic comedy you’ll be sorely disappointed. The film starts with a funny disclaimer and is presented in non-chronological order with each scene being introduced by which of the 500 days it is. Tom (Joesph Gordon-Levitt, the guy from Third Rock from the Sun) falls instantly for his colleague Summer (Zooey Deschanel, the girl from Yes Man) and believes she is “the one” and this is their destiny. Problem is Summer doesn’t believe in love or even want a boyfriend. She is intrigued by Tom and their friendship quickly develops into a romance but Summer avoids putting a label on it and Tom grows disillusioned. When Summer ends things Tom sinks into a depression which results in him quitting his job and questioning his beliefs. Without giving away the ending, what I took from the movie is that people come into your life and with each relationship/friendship we learn more about ourselves – I guess in a way that’s destiny!

To help promote the film, Gordon-Levitt and Deschanel starred in the debut episode of Microsoft Zune and Mean Magazine’s “Cinemash” series. In the episode, they “mash” the characters from the film Sid and Nancy with story elements from 500 Days of Summer.

Also check out this music video Marc Webb (the Director) created as a companion piece to the film, titled “The Bank Heist” featuring Deschanel and Gordon-Levitt dancing to “Why Do You Let Me Stay Here?”, a song by Deschanel’s folk group She & Him.

It’s finally official!  After the rumors the leaks, the drool worthy hands on photo ops, Microsoft has finally gotten official with the details of the very much anticipated Zune HD.  The “new hotness” officially drops on September 15th with 16gb and 32gb models each costing $220 and $290.  You can get your pre-order on today for the black and platinum versions.  The 16gb will be in black and the 32gb will be in platinum.  There will be additional colors available on September 15th, like blue, green, red, with Zune Originals artwork.  Also, certain lucky Best Buy Stores will have the Zune HD on display so people can get a chance to play with it.  I personally can’t wait until this thing drops.  Undercutting Apple by $100 on the 32gb is a great move.  One that I’m sure Apple will likely have an answer to come September or October.  But still, I want this thing so badly, I’m about to pre-order mine right now!

Microsoft has announced that the Zune HD is hitting stores on September 15th at prices that significantly undercut Apple’s iPod Touch, Microsoft has begun showing off the media player to journalists (not me, alas, but those who have seen it are enthusiastic). As before, it’s impressive from a specs standpoint, with 720p video output, HD radio capability, an OLED screen, and potent Nvidia graphics. In short, it’s promising. Does it have a shot at being what no Zune has been before it: a product that sells well enough to provide meaningful competition to the iPod?

I can’t provide a fully-baked take on that question until I’ve tried the Zune HD, but the most obvious and daunting challenge it faces is the fact that the iPod Touch piggybacks on the iPhone platform and therefore unlocks access to an amazing array of tens of thousands of applications. The Zune HD, if it lives up to its potential, will be what the iPod Touch was before Apple released the iPhone OS 2.0 software and opened the App Store: a slick media handheld with access to the Web via its browser.

I’m guessing, then, that for many follks who are drawn to the Zune HD’s hardware virtues and aggressive price enough to consider buying it instead of a Touch, the decision will boil down to this: App Store, or no App Store? It’ll be fascinating to see whether enough people don’t care about third-party programs to give the HD critical mass.

Apple has already inoculated the iPod Touch against unfavorable comparisons to the Zune HD to some extent through advertising that’s almost exclusively about the diversity of third-party apps–especially games. And we still don’t really know what the Zune-vs.-Touch comparison will look like, since Apple will almost certainly announce a new iPod Touch in September. It could be a little different from the current model or a major advance. (Side note: I think it would be kinda cool if Apple took the Touch on its own design journey over time rather than keeping it as “an iPhone without the phone”).

Then there’s the question of the Zune name. I sort of admire Microsoft for sticking with it–if nothing else, it shows persistence. The current Zune is a respectable old-school media player itself, but the Zune name feels permanently tarnished. It not only never acquired a tenth of the iPod’s coolness, but came to be associated (at least in the echo chamber of tech pundits) with failure. I still think it would make sense for the company to broaden the not-at-all-tarnished Xbox brand to encompass entertainment on devices of all sorts. But if that’s going to happen, it’s not happening now (even though there is evidence that Microsoft does want to broaden Xbox).

Of course, the best way to make Zune cool would be to release a cool Zune. What’s your take on whether the HD is, indeed, that Zune?

Can Microsoft’s latest Zune, the Zune HD, take down the king? It depends on which king you’re talking about. As it stands, the iPod Touch is a whole different beast because of the App Store. What Microsoft has done with the Zune HD is nothing short of spectacular, but who is it really competing with? My BlackBerry can play videos and show me pictures taken on a recent trip. The HTC Hero and/or myTouch 3G can stream music from the likes of last.fm or Slacker. I can download MP3s from my iPhone. Everything the Zune HD does, I’ve been able to do with a slew of different devices that I already own.[...]

Things are looking good for Microsoft and the Zune team with the HD, but I’m still waiting to hear what they have in store for the device because everything else is old hat.

via Hands-on with the Zune HD.

The Zune HD just hit the FCC in all of its glory.  There are two model numbers listed for the 16 and 32gb, 1395 and 1402.  There’s an interesting  mark on the inside case that reads “For Our Princess.”  Now if only we could get a price.

The Zune HD looks like it could be a competitor to the iPod Touch spec and price-wise – but probably not in the real-world unfortunately. The Zune HD is supposedly going to be available in 16GB and 32GB quantities and will be hitting markets this early September. The 3.3-inch OLED-packing Zune HD’s pricing for the 16GB model is expected to be somewhere between $250 to $280 USD, which is about 10% cheaper than the 16GB iPod Touch. After the initial launch, it looks like a rumoured 64GB model will be available as well. I favour the Zune HD over the iPod Touch simply because of its OLED display, cheap price, and Teflon backing, which is much better than the smudge backing of the iPod Touch. It just sucks that the App Store for the iPod Touch is just so damn good.

[Tech Radar, Crunch Gear, Gizmodo]