More details on Zune are starting to appear, and while there’s still no hard information on what the device will actually do (although the message from Microsoft is that it ain’t a portable Xbox; it’s a caring, sharing media playback device) the big picture is starting to emerge. I’m particularly interested in this snippet from Zune Zone:

Microsoft are not looking at payback from the Zune project until 3 to 5 years down the line, said Robbie Bach, president of Microsoft’s entertainment and devices division, today at Microsoft’s annual analyst meeting.

To me, that sounds like Microsoft’s doing an Xbox. You probably know this already, but just in case: the original Xbox lost Microsoft a whopping $4 billion over four years, but presumably Microsoft thought it was worth it to get 20% of the console market. And now, it seems as if it’s taking the same approach to Zune.

This isn’t a new approach. Amazon.com did it for years, losing as much as 30% on every sale until it had wiped out the competition and developed sufficient muscle to demand big discounts from retailers. While it was building up market share it lost a fortune, but in the long term that paid off. I think the same will ultimately happen with the Xbox – provided it eventually pays, that is; I can’t imagine a third-gen console from Microsoft if the 360 doesn’t get the games division back into the black. So if Microsoft is taking the same approach with the Zune, things could get interesting.

Of course, you can’t polish a turd, and no amount of discounting or long-term courage will persuade punters to buy a product if it sucks. But if we can leave Apple vs Microsoft fanboyism out of the picture for a moment, it’s important to acknowledge what Microsoft does. Yes, it rushes products to market; yes, sometimes it backs the wrong horse. But Microsoft is very good at learning from its mistakes, and it has both the determination and the cash reserves to stand by projects until they work. If the first Zune is good, then hurrah – even if you’re a die-hard Apple fan, competition is good because it’ll make Apple raise their game. And if the first Zune is bad? If Microsoft’s committed to losing money for three to five years, you can be sure that it’ll keep refining the device until it *is* good.

I’ve said before that Apple owes some of its iPod success to the complete inability of its competitors to get their shit together. I think that’s still true in many ways – Sony’s MP3 players are superb of late, but they still have Sony’s horrible software; some PlaysForSure devices are pretty nifty, but the vital spark (for me at least) is missing; Portable Media Centers are a nice idea, but not very attractive in reality, and so on.

Where Apple’s approach to digital music is icy cool and rather aloof – “We made this. We’re geniuses. Of course you’ll love it” – Microsoft’s more puppyish: “is this cute?” “What about now?” “Now?” “How about now?” “Love me love me love me love me!” And each time Microsoft tries, it tries that little bit harder, and it does things that little bit better – so for example, Windows Media player has evolved over its 11 iterations from something that really, really sucked to something that’s really very impressive. Windows Mobile did the same – used to suck, now it’s excellent – and while Microsoft’s forays into the portable media market haven’t been perfect so far, odds are they’ll get it right eventually.

I’m fascinated by this, and I really hope the Zune is as good as Microsoft clearly thinks it is – as I say, even if you hate Microsoft, an intense war between MS and Apple means both firms will raise their game. We’ll find out in the next couple of weeks when the device is finally revealed.

Naturally if it’s a piece of crap I’ll pretend I predicted that all along…