Where Microsoft screwed up was in abandoning their existing, semi-open DRM. If they had not done that, I would have gladly tossed my 3G iPod in the trash and switched. I am really tired of closed DRM schemes that prevent me from using my content on more than one device. However, I suspect the reasons behind that were more to do with the fact that PlaysForSure was cracked recently and concerns about being able to sign up the record labels.
The truth is, Apple has a virtual monopoly on this market now, and as long as there isn't a serious competitor they really have little motivation to advance the platform. How long will Apple sit on the large screen version of the iPod?
Microsoft hasn't proven anything, since the Zune is a repackaged Toshiba GigaBeat S - only slight modifications.
1. Large screen - well, that hasn't helped the GigaBeat S, since it has failed to make a dent in the iPod's sales. And a large screen means a bigger device, which people have emphatically demonstrated that they do not want.
2. Some people have been very vocal about wanting the FM tuner, but Apple keeps surveying their customers and a tuner isn't high on the list of what their actual customers want.
3. Um, the buggy screaming pig on Windows? Other than the OS itself? And the Zune software appears to have even *more* problems than that. iTunes/Windows looks like a shining example of reliability compared to that.
And they'll sit on the large screen version as long as it takes them to get the new hybrid touchscreen right. Unlike MS and the entire satellite industry around Windows, Apple isn't willing to ship something that's half-baked out the door because "market experts" demand that they do it.
They're taking their time and they're doing it right.
We have at least one FReeper that works on the iPod for Apple doing software (might be a company contracting with Apple). He's explained it a number of times.