The news today that the new Zune's from Microsoft were outselling Apple's own enigmatic iPod on Amazon.com got me wondering if this was some sort of trick by Microsoft to create artificial scarcity and repeat their smash of the Xbox 360 or if the player had finally caught on with consumers.

Introduced only a week ago, by this morning Microsoft 's heavily discounted, 30-gigabyte, $134 Zune digital media player was ranked the No. 1 bestseller in the Seattle online retailer's list of top-selling MP3 players in the "Electronics" category. Apple's four-gigabyte iPod nano was No. 2, followed by Apple's 80-gigabyte iPod "classic" at No. 3.

Last week, the Redmond computer giant introduced a new 80-gigabyte Zune player, but they're hard to find. Amazon's site on Monday said they're "temporarily out of stock" and no future shipping date was listed. Microsoft's own Zune site said the 80-gigabyte player can't be ordered until "early December."

In more ways than one, the new Zune's take a strong set of differentia from the first generation and execute more effectively while adding features that truly make it a hipper product. USAToday had a review recently:(read more)

The combination of Apple's casual marketing plan and high quality products have struck a target market that has been hard to reach for most major companies. The tech savvy Generation Y (aka Millennials) have been characterized as being brand apathetic, resenting obvious ad campaigns that target their psychological profile, who are now the Applephiles supporting everything Apple; they also happen to be 32% of the consuming population. Apple's advertisements lately have been mostly for the iPod/iTunes/iPhone line of products, but all that buzz has rubbed off on the less publicized Mac.

While recently Apple's Mac didn't have the most spectacular growth with 26% (compared to competitors, Acer saw an explosion of 164% and Tobisha saw a 54% growth) the story doesn't lie in any specific percentages, it's the fact that Apple understands its target market, which has allowed them to tie with Gateway for market share. But PC makers aren't the only ones that need to worry about Apple growth in their markets, the recent iPhone has demonstrated that any market in the technology sector could be threatened by Apple. The Millennials are a generation big enough to hurt a boomer brand simply by giving it the cold shoulder.

It is first noted in 1999 that Apple realized that targeting Gen Y could be extremely beneficial though they weren't exactly on target when Allen Olivo, Apple's previous senior director for worldwide marketing, said, 'For this generation, the computer is like a hot rod. Still, acknowledging Gen Y early on proved beneficial as some of history's biggest brands got started by bonding with boomers early and following them from youth into middle age.(read more)

In case you missed it, Apple recently entered the mobile phone market with the iPhone, an elegant device designed to converge and replace a mobile phone, iPod, and Internet-computing activities such as email and Web surfing, furnishing consumers with a gadget that can basically do anything you will ever need it to do. But how many people actually use all of that functionality? Did they over-shoot consumer needs with a feature-crammed, overpriced, slow-networked techno-bauble or did they create a new device category that fulfills needs that people didn't know they had?

The iPhone fits better in the more sophisticated smartphone market segment and by selling as many as 700,000 units in its first weekend is expected to sell 10 million units in 2008 which could amount to 5% of the market, far more than Apple CEO Steve Jobs stated goal of 1% market share. However, Apple also appears to be hatching plans to launch a cheaper version of the iPhone to compete in the lower-end and much larger handset market segment (dumbphone anyone?) in the fourth quarter that could be on the future of the ultra-slim iPod Nano form factor, according to a JP Morgan report.

A patent filed on July 5 describing a multifunction handheld device with a circular touch pad control, similar to the Nano's scroll wheel led Kevin Chang of JP Morgan to declare, "we believe that the iPod Nano will be converted into a phone because it's probably the only way for Apple to launch a lower end phone without severely cannibalizing iPod Nano." Because most Americans spend no more than $100 on an cell phone, Chang also believes that a lower-priced, Nano-based phone could sell up to 40 million units.(read more)

The fundamental weaknesses of an integrated value chain like the one that exists between iTunes and Apple's iPod products and, now, the iPhone, is that even the most fawning of customers inherently rebel - some in the form of hacking the system - against such a compulsion against consumer choice. Today, in the face of growing hegemonic power in realms expanding from media to telecommunications with last Friday's iPhone launch, those same hackers are trying to disintegrate that value chain for themselves, attempting to rid the revolutionary new device from the grip of AT&T's last generation data network.

What defines value for Apple's customers? Well, in addition to the innovation in user experience and design packed into every one of its products, Apple's brand itself is as much the performance defining characteristic that draws legions of loyal buyers to iconic products like the iPhone.

But even as the company protects its inherent advantage by erecting barriers to competition in its value chain, that same source of strength can become the company's greatest weakness. Just as Apple's hegemony in the digital music distribution business has been based on the inseparable linkage between iTunes and the company's iPod media players, the integration between the new iPhone and the AT&T network as the sole wireless carrier presents a target for disintegration that hackers have found hard to resist. What's at stake is nothing less than Apple's compelling value proposition itself - its formidable proprietary product linkages.(read more)

The ridiculously over-hyped introduction of that most revolutionary of products burdened by such mediocre technical specs, Apple's iPhone is here at last and competitors are putting on a nice front by thanking Apple for building demand for smart phones in general.

Indeed, it seems consumers weren't content to wait the six months for the iPhone as Research In Motion (RIM) announced a three-for-one stock split net income grew a staggering 73% to $223.2 million or $1.17 a share from last year, as revenue climbed 76% to $1.08 billion.

For many, this was rather less surprising as RIM finally penetrated the consumer space with its cool new BlackBerry Pearl and Curve products, adding to its base of corporate customers and solidifying its position at the top of the heap of smartphone vendors... in North America at least.

But for those standing in line at AT&T and Apple retail stores in cities around the country (some since Monday) to get their hands on the new iPhone, RIM, Nokia, Palm, and Motorola all have smartphones that have gained a halo effect of exposure to the marketplace, just by giving consumers a less expensive, business savvy option. In fact, it can be argued by growing the pie for everyone with a rather mediocre product that simply delights prospective buyers with a much-improved user experience, Apple has in fact put wind in the sails of all wireless phone makers and carriers alike by disappointing power users unwilling to part with a few days wages in return for the first generation of anything.(read more)

Spinning the absence of a software development kit (SDK) for the iPhone, Jobs suggested that AJAX and other open standards UI programming principles for the Web would allow developers to create content that looks and behaves exactly like apps and would further mean users and developers alike wouldn't have to compromise on security, reliability or, for that matter, the ecosystem strategy Apple is grafting onto the iPhone from its hegemonic iTunes/iPod franchise.

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I noticed this piece from the UK the other day about the resurgence of vendors such as Sony Ericsson in the face of the iPod's recent 100 millionth shipment milestone - in fact, it really wasn't until Apple put iTunes on Windows that the iPod became a real phenom... in light of all that, is the upcoming iPhone more of a defensive competitive maneuver than offensive innovation for Apple? Here's the excerpt:

Apple was celebrating last week as it marked the sale of its 100 millionth iPod - a landmark, the company claimed, that makes it the fastest-selling music player in history.

I don't think any of us could ever have dreamt that we could come this far this fast, said Greg Joswiak, Apple's vice-president of hardware marketing.

It's hard to quibble. Five-and-a-half years after the introduction of the first model, the iPod has entered into the annals of business history, while simultaneously becoming a design and fashion icon.

In November 2001, Apple was a $5 billion (£2.5 billion) a year company with a great past but uncertain future at the periphery of the computer industry.

This year, the company is on course to rack up revenues of $23 billion, with more than half of that coming from iPods and the sale of songs from the iTunes music store.

Symbolically, it recently dropped the word Computer from its name, becoming simply Apple Inc.

Millions of happy iPod users have been tempted to seek out the same style and ease-of-use in Apple's Macintosh computers, which are now selling in greater numbers than ever before. (read more)

Henry Blodget called out his nemesis-of-late, Jim Cramer, about Cramer's recent seeming endorsement of questionable (and potentially illegal) trading practices that hedge fund managers should be using to help their clients outperform the market, or at least, at the close of last year when he did the interview, make up for lost dough.

Widespread outrage at the video (which was recently pulled down from YouTube.com but is apparently still available at TheStreet.com) calls into question Cramer's brand reputation as trying to help the little guy - instead talking out of both sides of his mouth advocating the big hedge funds to manipulate share prices in order to cash in. If it's any indication of how most readers found the story, the comment below leads me to believe the investing public is pretty angry:

Perhaps Eliot Spitzer should have investigated this type of activity too while he was Atty General. Except that he's a good friend of Cramer, invested in his hedge fund, and thus profited from these activities. Oh well, nevermind, guess that's why he spent so much time picking on Dick Grasso instead - just hoping we would all forget about he and Mr. Cramer's relationship.

Interestingly, while looking at that NYTimes recap, I found the following video and, now that I can post YouTube videos here, thought I'd share it with you about another scandal brewing on Wall Street. Browse below.

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Worldviews matter a lot - maybe more than anything else - when it comes to competitive strategy. This was highlighted last week as Viacom launched a copyright infringement lawsuit against YouTube and Google claiming $1 billion in damages from the 150,000 clips of their content (in particular, the vast library of MTV programming) that has been collectively viewed more than 1.5 billion times.

Viacom claims that, although YouTube does remove such material if asked, the Google-owned company deliberately puts the burden on the copyright holder, and makes it unreasonably difficult for copyrighted works to be removed. This has led to the fantastic gains in traffic, trending momentum that amounted to a valuation in Google's acquisition of YouTube of $1.65 billion when the companies merged a few months ago despite YouTube's "immaterial" contribution to Google's revenue mix.(read more)

With the Grammy awards last night bouncing back in the ratings (though I still didn't watch it, they at least had the sense not to go up against American Idol like last year), the RIAA was in full effect and showing their rebel streak by blue-stating the Dixie Chicks with honors they'd never see at the Country Music Awards.

For the first time since Eric Clapton in 1993 bestowing upon the DCs FIVE awards, including album of the year, record of the year and song of the year. WHEW!

Even as mainstream pop waxed, rap records were waning as hip-hop got no love from the Recording Academy with zero nominations outside the rap category for the first time in years. Perhaps there is still hope for America's youth.

Why do I think the Dixie Chicks won for "Not Ready to Make Nice"?

Their co-author of course: Dan Wilson, Minneapolitan songwriter from Semisonic and Trip Shakespeare shared the honors.

What's interesting in all this music industry PR wasn't the reunion of The Police (though cool), but that it came even as Apple's extraordinary sense of timing has just finished forcing media companies of every ilk to bow before the iPod monopoly of consumers similarly locked into the iTunes digital distribution channel. (read more)