Having visions of Zune being an "also-ran" with a big marketing budget, rather than the earth shaking market disruptor the fan-boys are predicting? So am I.

Bryan Lee, VP of Microsoft's Entertainment and Devices Division recently took on Zune critics during Citigroup's Global Technology Conference. The Seattle Post-Intelligencer excerpted a few tasty tidbits from his remarks, and they go a long way towards explaining Microsoft's mindset. They also reveal some issues that I think are far from trivial.

The funniest of the excerpts.. ""As we've gone out and talked to consumers about Zune, we've asked them, 'Do you feel you have choice in the space?' and we get a resounding, 'Yes, we have a lot of choice -- you can get a Shuffle, a Nano, a video iPod.' ... Which just amplifies the challenge that we face."

This roughly translates to "iTunes is the dominant player.. what we're really trying to displace is iTMS, not the iPod". So, why is everyone focusing on Zune and not Urge? Zune is sexy, and last I checked.. Urge is not.

As for why Microsoft thinks they have room to wedge themselves in between the iPod and the wall.. "We see this space as having the potential scale not of today's market, which sells 30, 40 million devices, but of something closer to the cell phone market, where you sell hundreds of millions of devices."

Lee may have a bit of a point here, the market really could expand to that volume, given the world's population. But, do you really see the "turnover" that the mobile phone market generates? Mobile phones have some very specific reasons that they are so often "flipped" by their owners, mp3 players not so much. Mp3 players work till they break, or until capacity or a compelling new feature forces you to upgrade. How many compelling new features can we really count on?

And finally, the community aspect of Zune. Everything is getting "social" these days, and Microsoft wants to do the obvious and attach that to music on the go. "[M]y experience gets better because I have one, because you have one, because Joe has one. We can learn from each other. The device can learn from me, and it can learn from each of us. When we get specific on features and things that we're doing, you'll see a lot of emphasis on community, on a shared type of experience."

The problem with this is, you have to reach an enormous level of critical mass for the value added experience to matter. It's going to take a huge amount of marketing and muscle to do that, something Microsoft can do. It's also going to take a very compelling user experience to manufacture a "need" for the Zune over any other PlaysForSure licensed device. I'm not sure they can pull off this super-compelling experience.

Aside from that, and what may be the largest issue; I'm not sure that Microsoft isn't buying themselves a lawsuit from the RIAA, much like XM. The ability to stream music to other players, as limited as it may be, is a controversial issue. I'm sure Microsoft has weighed the consequences and the resulting "sharing" will be exceptionally limited in scope -- but -- these features that will be limited (and possibly litigated) are the exact selling points of the device. XM built the XM2go to explicitly comply with existing law, and they were still sued. Are you so sure Microsoft isn't next?