Microsoft has been in battle for second in the digital media player (DMP) market for 3 years now with Apple having lapped the competition more than once. But is the race and the season drawing to a close on this one? (pardon the moto euphemism, after all we are in the middle of the F1 and MotoGP seasons.)

In the past Microsoft has been known to devour markets they set their sights on even when they were far from first-movers. If you think about it, it was quite a smart strategy. Let the little nimble, hungry, entrepreneurial innovators prove a market and it becomes viable. Then Microsoft puts in 10-100x the money and win by sheer force. Simple, right? And everyone knows that large organizations almost always cannot provide the motivation that keeps innovators wanting to stay put anyway.

Well the iPod market is something quite different. First of all Apple is not just some startup. Second of all they have obsessive execution. But most importantly, they connect the dots. This is where user-experience, usability and convergence (especially in a daily-use consumer device) come in to play. And being an information architect this is why I have such a strong opinion on the subject.

To say that Microsoft really entered the DMP market too late, would be quite an understatement. They spent years fumbling with various hardware partners and could not deliver a device that consumers could get obsessed about. They finally pushed out a device (brown Zune) only to deliver a slightly clumsier form-factor, similar feature-set, low-cost leader. Those attributes didn’t get anyone excited and wanting to dump their other shiny device they were already happy with. To add insult to injury, Microsoft didn’t even bother to integrate with their own software infrastructure. No syncing with Media Center or even the Windows Media Player. Who in their right mind thought that was ok???

Here is where I’ll digress to a personal story…

A few years ago I was at the National Association of Broadcasters show in Las Vegas and stopped by the Microsoft booth. In one corner they were showing off their broadcast programming software, in another they were showing off HD-DVD, in the third their IPTV cablebox software and the fourth was so inconsequential I don’t remember now. So I went to the HD-DVD corner and to get a demo. I ask the three marketeers there how and when this will allow me (an avid Media Center user) to be able to record HD shows to the discs? And were the recently announced cablecard tuners coming? They didn’t have any answers. I go to the IPTV corner and ask them how this will integrate with Media Center and burn recordings to HD-DVD. No answer. In fact the guy didn’t even know what they were doing on the other side of the booth. This is when I realized that Microsoft’s #1 problem (by far) was that they have no unified strategy. Instead they were a conglomerate of many different camps that sometimes even competed with each other.

Back to our timeline. Later came the 2nd generation Zune. And there were lot’s of improvements over the current at the time iPod. All looked great and some missteps were fixed. All but a small miscalculation. The iPhone/iPod touch was announced and put the Zune firmly 1+ years behind once more. Granted there were some conveniences that Apple still didn’t offer (and to this day doesn’t) like wireless-sync and FM radio. But obviously they were not compelling enough to make a difference.

That brings us to today. This week Microsoft announced the Zune HD that will go on-sale in September. It has a slightly updated UI. It has an OLED screen. It has HD output. It’s good bang for the (storage) buck. But it still doesn’t integrate with Microsoft’s other products even in the entertainment arena: Media Center, Xbox and Windows Media Player. The one advantage in user volume that they have they are not using. Plain dumb and wasteful.

At this point Microsoft can just throw in the towel. Not only will they not catch up on the DMP side but they’ve managed to give away the smart phone market (the profitable high-end one) and not even realize that it has become one and the same. For a long time technology convergence has been a magic concept. How can even the slickest single purpose media device compete with a dmp/phone/pocket computer all with a 99% satisfaction rating?

Sorry Microsoft, but until you make a Zune phone that leapfrogs the iPhone in shininess, you don’t stand a chance at leadership. And even then good luck competing with the 3rd party developer community which is not only committed to the iPhone but is now strong enough to chip away at the core windows app market.

And yes I’ve seen Microsoft’s talking points about them wanting to have a solid second position, but that is simply a cop-out.