So I’m sure everyone’s heard about it through CNN or whatever. It’s definitely not a rumor and Microsoft has done an exceptional job at hiding this thing from a ton of people, including.. Microsoft itself. There’s no mention of it at all at MS and there are no internal sites for it (as far as I know). I can’t find anything about it. Engadget though, has done a pretty good job of getting inside information, but the question remains as to whether it was leaked or voluntary for the purposes of viral marketing. If the latter is the case, well, I’m just contributing to that :)

Some of the cool things heard so far:

1. The Zune will have WiFi, and through this you can download songs without a laptop and you can also share songs instantly with friends wirelessly.

2. There are multiple devices, one of which will be an Xbox branded portable gaming system with Live Anywhere integration.

3. In order to convert you from iTunes Music Store to Zune’s own media service, they’re going to offer to convert you for free (i.e. you can download any song you downloaded from iTMS for free, which is a crazy deal)

4. Pyxis is the codename for their Nano competitor. It will have video too. Not sure how that’s gonna work…

5. Zune’s media service will be driven by the community through recommendations and such. Much like digg.com.

6. The Zune is headed by Robbie Bach and J Allard, who heads all the design and engineering of the XBox. J Allard is pretty interesting. He is best known for sending a memo to Microsoft in the mid-90s about the rise of the Internet, which reshaped their entire direction of the company. He also legally changed his name from “James” to “J”. Seriously.

There are three things I’m concerned about:

1. DRM. Digital Rights Management. This is basically what iTunes does to force you to get an iPod when you use iTunes Music Store — all songs bought from iTMS play only on an iPod and the original computer plus or minus a few that you register. So Zune will have this in order to have full vertical end-to-end integration services (Zune player, Zune media organizer, Zune online store). What many people think is that DRM protects artists and such but in reality it doesn’t add any value for either artists or consumers. It’s just a way of enclosing various technologies together and preventing others from utilizing a part of the whole.

2. Having multiple devices that are aimed at the same market segment is not a good idea. In the end, you’re going to be creating unnecessary loss. The iPod family was successful because it was able to provide *just* enough innovation in each successive release to warrant the buying of it. What’s the difference between the iPod mini and the Ipod nano? Not much from a high-level point of view, but the timings of both releases were the keys to their successes. MS has to do a good job of hiding their successive Zune devices from the public; hiding the future guarantees a healthy consumer surplus in the present.

3. Wifi Sharing. There are two ways MS could do this. I’m sure they won’t allow you to just give a song to someone else directly. Considering their efforts to enforce DRM, this is impossible. A possibility is that they would allow you to swap songs. So you could trade a song for someone else’s. The other possibility is that instead of even sharing songs, you could send a notice to someone else’s Zune to ‘bookmark’ a song on their account on the Zune online store. This is useful for rare songs, but the popularity of this remains shaky.