Microsoft From Z to A

I've been pretty hard on Microsoft's (Nasdaq: MSFT  ) efforts with Zune. Hey, I feel entitled. After all, I'm not only a Microsoft shareholder, I'm a member of a 2-Zune household, including one infamous brown Zune. Today, I have to give Redmond a round of applause for its grade-A upgrade to the much-maligned music-player line.

Zune 2 goodies for Zune one, too
Today, Mr. Softy officially released the second generation of its Zune players. I haven't had a chance to fiddle with them yet, but to judge by the consolation prize offered to early Zune adopters, Microsoft has learned some important lessons on how to treat customers and survive, maybe even thrive, in the personal media player space.

One of the more interesting strategies is the availability of customized artwork via ZuneOriginals, where, free of extra fees, buyers can match their favorite color with some four-dozen original designs plus, with 20 of these, custom text. This should not only attract some added interest in the second-generation players, but it should mean higher-margin sales for Microsoft than those made through retailers.

But here's where the Zune team has leaped the highest over its competitors. Unlike the more hide-bound Apple (Nasdaq: AAPL  ) , Redmond's Zune team opted to hand out most of the updated Zune features to owners of the previous generation of players. With a couple of dead-simple-to-install updates, owners of first-generation Zune players have access to the newer, much prettier Zune desktop software.

More importantly, Microsoft shared the new Zune device operating system with generation 1 owners via a firmware upgrade -- one that went off without a hitch for me, even though my antivirus software popped up and started chugging during the install.

Eye candy
The new user interface on the Zune features updated, larger, easier-to-read, modern-looking graphics, but keeps the best features of the previous interface, including the innovative "twist" system. Between the desktop software and the firmware upgrade, the Zune now also incorporates first-class podcast support, something that was sorely lacking for the Zune's first year.

Not only is this well thought out (allowing customized podcast settings for individual feeds), the software was actually smart enough to clean up the mess created by my previous, third-party podcasting tool.

Stuff that's actually useful
The WiFi chip in the device is now much less useless. Sure, there aren't many Zune carriers out there with whom to share tracks, but when you do "squirt" a tune across the airwaves, it'll no longer be subject to the dreaded "3-day" expiration, just the "3-play" limit.

And the new Zune software allows wireless synchronization of your player through your home wireless network -- a nifty feature, especially for those of us who often leave the device attached to the Xbox 360. This worked flawlessly for me -- after I remembered my network's access code. It's not as speedy as a wired sync, of course, but it does offer some convenience.

It would be nice if the Zune's wireless capabilities were put to even better use -- like the downloads you can get via SanDisk's (Nasdaq: SNDK  ) players, or Apple's iPod touch, but a step forward is a step forward.

Foolish final thought
None of this, of course, makes the Zune an "iPod killer," but that designation was invented by the press, which can't survive without making everything into a deathmatch. With the 80-gigabyte Zune 2 garnering good reviews, and with making strides in the DRM-free song download space, the Zune becomes a much more viable option for those who don't want the iPod -- and for fans of subscription music services, like me, the Zune is really the only game in town.

The new Zune initiative should give shareholders some faith that Microsoft can learn, and can even offer features that are lacking in the market leader. In other words, Zune's path looks similar to that of the Xbox, which was laughed at in concept, berated and beloved in generation 1, and got great traction as time wore on.

Now, if only Microsoft can nurse these consumer electronics devices to the point of profitability, shareholders might see a payoff.

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