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The original Microsoft Zune was ugly, a portable digital music player about as sleek as a shoebox and encased in a laughingstock of drab shells. But, oh, those plucky underdogs at Microsoft, they keep chipping and chipping away.
A second generation of Zune has been on sale for a couple of months, and while it won't knock the iPod out of the top spot any time soon, it is a big leap forward. The new Zune is thinner, comes in vibrant colours and pairs with a much-improved online service. As it always does with rivals, Microsoft doesn't stop until it closes the gap.
The Zune's marketers are having to play jujitsu, using the iPod's ubiquity against it. Microsofties won't put the message this bluntly, but the pitch goes something like this: Every dumb yuppie poser has an iPod. Your parents and grandparents have iPods. Do you really want to be like them? Or are you a rebel, a hipster, the first on your block to have something different?
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Without talking numbers, Microsoft says Zune has gained a foothold among kids ages 13 to 24 and among fans of urban and hip-hop music. "We're developing a brand that is more warm, more welcoming, kind of a smarter alternative," says Jason Reindorp, a marketing director at Zune who earlier helped Audi position itself as the cooler alternative to the nouveaux riches' BMW. "The folks on the cutting edge of that group said, 'I don't want a waify little iPod. I like the colour of the Zune. I like the chunkiness.'" To push this along, Microsoft is sponsoring concert tours by Velvet Revolver, Chemical Brothers, MIMS, Ladytron and CSS.
To test Microsoft's appeal with the cutting edge, I lent a new 8-gigabyte Zune to Sara Itani, a 17-year-old computer geek and hip-hop fan who is heading to Massachusetts Institute of Technology next fall. Her takeaway: "I love it. It's better than the iPod Nano. The interface blows me away. It's more efficient. And the Zune software is really pretty. It makes iTunes look like a spreadsheet, honestly."
The new Zunes have some useful features the iPod lacks, such as a built-in FM tuner and wireless synchronization, which lets the Zune in your living room automatically fetch new songs from the PC in your office. Once you get used to the synch feature you really don't want to give it up. The Zune's touchpad is now arguably better than the scroll wheel on traditional iPods, though it's not as fun as finger-flicking through albums on an iPod touch.
Microsoft also offers a subscription service, something Apple (nasdaq: AAPL - news - people ) has resisted. For $15 a month you get access to all the music in the Zune Marketplace. I was skeptical at first about renting music, but now I'm hooked. Instead of wondering what you should buy, you only need to wonder what to toss. The Marketplace is great at showing you lists of performers similar to the ones you like, plus a list of that artist's influences. The page for the Black Crowes leads you to Led Zeppelin, which leads you to Willie Dixon and Muddy Waters.
Microsoft ambitiously gave the Zune the ability to "squirt" songs wirelessly to other Zunes and connect them using Zune Social, a social network based on music. But good luck finding another Zune user at an airport or on a train. There aren't yet enough of them to make these services worthwhile.
Which brings us back to Sara, who says she would buy a Zune if she didn't already own two fully accessorized iPods and tons of songs and videos that will only play on an iPod. She's locked in. Over the holidays she upgraded to an iPod touch.
Microsoft, you've got your work cut out for you.
