The New York Times' Saul Hansell has interviewed Microsoft's J Allard, an important figure behind the Xbox who is now working on the Zune and a few other secret product efforts. I would strongly recommend reading all three articles as they are full of information regarding Microsoft: J Allard's thoughts about the future as well as his thoughts on past mistakes. Here are some excerpts:
"Even though the Zune and Xbox product brands are separate, they are ultimately meant to connect to the same central network. The online services for Xbox, Zune and future products will merge. Video will be a key part of this service."
View: Microsoft's Plan to Be King of All Media
"The iPhone is a great product, but not because it is a music player. Wireless carriers kept Microsoft from making good phone software. Microsoft will add more features from the Zune into Windows Mobile phones. Making software is a better business than making phones."
View: Dancing Around the Cellphone Question
"The less-than-enthusiastic response to the first generation of Zunes was an important learning experience. For tracks purchased, digital rights management systems (of which Microsoft is the leading provider) have failed for consumers. Music subscription services are very promising. But the music labels have hurt them, imposing too many restrictions. (Microsoft's Zune Pass service costs $15 a month to load any of 3 million songs onto the Zune Player). Record labels are simply going to have to change what business they are in."
View: The Failures of the Zune and the Record Labels