A demo of the Zune HD

Steve Ballmer has made a demostration to Engadget of a prototype of the Zune HD.

The MP3 player seems of very good value with its OLED screen that gives a marvellous display of a Pixar video, certainly in a move not designed to be friendly to Steve Jobs.

As you might suspect, Microsoft is placing a large bet on this product that it hopes will put the iPod Touch in the shadows. However if the situation were already difficult with first Zune going head to head with iPod " classic" , things have become much more complicated. This is no longer a war of one device compared to another or a shop selling music compared to another one, but much more.  The AppStore has become a colossal success, proposing thousands of software titles, which Zune HD will not have.
Microsoft will have to make a double play: convincing the customers to buy its player, and at the same time hope that developers will propose software. It will need a lot of energy to start these two pumps, Apple did not have this need thanks to success of the iPhone.