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You don't need Microsoft's high-powered marketing staff or sophisticated statistics to know where the power currently lies in the portable media player market. Very simply, the score reads something like this: Apple's iPod, 100 million units shipped; Microsoft's Zune, 1 million. Yes, the iPod entered the market a full five years before Zune did; and yes, there's a smattering of other small competitors. However, when you're Microsoft, and you're outplayed 100-to-1 -- and then the iPhone comes out with multimedia capabilities -- you've got to be working hard on a plan.
One of the element key to the success of the iPod, which commentators either fail to mention or fail to consider, is iTunes.
I do not mean the iTunes Store, but just iTunes. iTunes is one of the best ways to manage a large music/podcast library.
The iPod/iTunes combination is typical of Apple's approach where Apple considers the whole user experience. If it is difficult to get music on to ones portable music player then it is far less enjoyable and useful portable music player.
As you noted, the most requested feature was a cell - lo and behold, the iphone, only a few hundred dollars more than a deadend zune with zero cachet. For a few hundred more, they get an ipod wrapped around an iphone - two of the most cachet devices in the last 6 years. 70% of Zune users said they wanted an iphone.
Not sure why they keep talking up the Xbox likes it's some great hope of MS. They are in the hole for $16 BILLION in which they will never recover - especially with a product with a 40% fail rate and MS' refusal to recall it. It's the Ford Explorer of 2007. It's dead. The name branding is now equated with a dead console.
Since your logic is that it's the timing of Apple's entry into the mp3 market that explains its success relative to Zune, the iPhone will be a miserable failure because it's even later to the cell phone market than Zune was to the music player market.
We'll see. BTW, the iPod wasn't received with anything remotely close to the response to the iPhone.