Interesting -- read the full post for more analysis
The key to Microsoft's decision to make the Zune, I was told, is that while Apple controls 75 to 80 percent of the overall market for MP3 players, Apple completely controls the only parts of the market that make money (i.e. large capacity MP3 players). For all of its work creating the underlying technologies for the PlaysForSure initiative, Microsoft watched as its numerous hardware partners, collectively, managed only to steal tiny amounts of share in the low-end flash memory player part of the business. This is not a sustainable business model, I was told.