Microsoft Shifts Business Models has an interesting look at an ever shifting Microsoft.

WHO in his right mind would step into the ring against the iPod? Apple Computer's sleek music-player, and its iTunes software and online store, dominate the digital-music industry as comprehensively as Microsoft's Windows operating system dominates desktop computing. But just as Apple has tried for years to loosen Microsoft's grip on computing, so Microsoft now hopes to loosen Apple's hold on digital music. On November 14th, the software giant will launch Zune, a music-player that looks and works very much like an iPod.

Zune is unlikely "to make any dent at all in Apple's market share," says Tim Bajarin of Creative Strategies, a consultancy in Silicon Valley. But Microsoft probably has no choice but to try, he adds. During its first 25 years, he says, Microsoft succeeded above all by bringing computer technology to businesses; to succeed in its next 25 years, it must turn its attention to consumer gadgets, for that is where the innovation and growth will be.

From what I've seen of the Zune, it has some nice features that the iPod doesn't. Still, given Microsoft's money and brainpower, they should be leading into the markets they want, not following.