Microsoft's Zune was released in the US in November 2006 and sales have been disappointing so far, in fact except for the launch week there's been no week where the Zune has sold over 1000 units. A lot of problems with the Zune are caused by perception (a lot of people think they're only available in brown), pricing (same price as an iPod - people will only pay a premium for the market leader) and the defective by design wireless sharing which adds bulk to the product without providing any useful purpose.
The roll out to the rest of the world has been temporarily suspended while Microsoft finalize plans for the Zune 360 bringing them parity with their successful Xbox line of consoles. As yet, no information has been leaked so we have no pictures of this new product, but it is planned to be released in June and in a break from typical Microsoft style of announce plans early and often they've decided to follow a more secretive Apple style approach. Still, it's amazing what information you can get out of a Microsoft rep if you feed them 10 bottles of Duvel, for some of them 2 bottles will even do.
So what do we know already? First of all the Zune's screen will be extended to the full size of the device resembling the iPhone. The device will be able to be controlled by a touch screen or with buttons on its side, unlike the iPhone the Zune 360 will also feature a stylus and handwriting recognition which you can use to search for music in your online library. However, initial versions of the Zune 360 will not include any telephony functionality this is because the aim is to keep the price at affordable levels, also including telephone functionality would add to the size of the device. The Zune 360 will come with two disk sizes 40 GB and 80 GB, pricing is set to start at the level of the 30 GB iPod for the 40 GB device. It will be possible to make third party apps for the Zune 360 but these will only be made available via the Zune Marketplace is they will need to be signed by Microsoft. One application that will be included is Pocket IE so you can browse the web from a wireless hotspot.
The brown color will go, it has been the cause of too many jokes at Microsoft's expense, the default will be white but it will be possible to replace the covers fairly easily, it is planned to increase the market for 3rd party covers, and as the cover will be easily replaced it means there's no need to add extra bulk like you'd need with an iPod protective case.
The Zune 180 is Microsoft's attempt to capture the iPod Nano and cellphone market in one go. Although Microsoft cannot see the market for a high end smartphone they do see the potential to capture the low end flash player market. For the first iteration of the Zune 180 they have partnered with Sony Ericsson and will produce a model based on their Walkman W880 phone, this phone is almost as thin as an iPod Nano and can hold up to 2 GB of removable flash based storage. Microsoft will be customising the design (in particular making the user interface more like the Zune and slightly modifying the styling of the case) and of course will make the player compatible with the Zune Marketplace DRM encoded files. The Zune 180 won't be the first time they've partnered with a rival, the original Zune was based on the Toshiba Gigabeat. The Zune 360 has been designed entirely in house.
Microsoft is hoping that the real advantage of the Zune 180 will be the discounts offered to cellphone subscribers (it's not planned to tie the Zune 180 down to one single network), this will make it substantially cheaper than an iPod nano to those who were looking for a new cellphone, for those not looking for a cellphone a cheaper Zune 180N will be available with only music player functionality. No wi-fi option will be available initially in the Zune 180, however, bluetooth will be and it will be possible to use a bluetooth headset.
These changes should make Microsoft a major competitor in the portable music player and cellphone market. This time they may have learned from their previous mistakes in this area. This time the Zune 360 will be launched worldwide simultaneously, whereas the Zune 180 will be released in worldwide markets separately, once the phones are made that are compatible with each market.
Although the default behavior will be to connect the Zune 360 and 180 to a Windows machine and use the default Zune software (which is also undergoing a revamp) it will be possible to put the Zune 360 in to disk mode and the device will be treated like any ordinary USB storage device and will therefore be accessible from Mac and Linux machines too. The built in indexing in the 360 will allow you to easily search for songs, however out of the box it's not possible to create playlists on the 360 itself, they still need to be managed by the Zune software. However, there's nothing to stop someone writing a Zune 360 add on application that allows users to customize playlists on the device itself.
Due to the storage limitations of the Zune 180 there's no plan to offer a disk mode on this device meaning that you will need the Zune software (and Windows) to interact with that.