I wouldn't expect Arik "Byte of the Apple" Hesseldahl to come out with a rave for Zune, but I do expect him to be clear-eyed about the prospects for Microsoft's latest iPod challenger. That's why I actually take it seriously when he says Zune is "Falling Down on Cool."
Remember the three rules of cool, as documented by Malcolm Gladwell in The New Yorker almost a decade ago. First: The act of discovering cool causes cool to move on. If you accept that the iPod is still cool, as many still do, then the Zune can't help but seem an arriviste, an interloper, poseur product encroaching on well-defined "cool" territory. When the uncool discover a cool place, the cool take their business elsewhere. Microsoft's a little light on the cool bona fides, despite the Xbox 360.
The Zune will seem a not-pod, proving the second rule of cool: It cannot be manufactured, only observed, and then by those who are themselves cool. An iPod is a requisite accoutrement of cool. This is the result of a carefully constructed marketing effort on Apple's part. Any attempt that Microsoft makes to market the Zune will fall short of the high bar set by Apple, which has an almost natural sense for turning its ads into entertainment. Describe for me three Apple TV ads you remember from the last two years. Now, try to describe for me three Microsoft ads. Bet you can't. That's the Apple marketing machine at work.
Finally, there's the third rule of cool: You have to be cool to know cool. And since when is Microsoft cool? The iPod was cool from birth. The Zune will be seen for what it is: a me-too product that is expressing Microsoft's envy at not being cool. It will carve out its own niche of the market, but by this time next year, it will be considered a dismal failure.
A lot of tech punditry focuses on the feature set ("feeds and speeds") and buzzword compliance ("it's social-x!") of new new things, which means it almost always loses sight of the irrational, emotional factors that go into making one product a hit and dozens of other similar, perhaps even more capable, products duds.
Rules for cool may be as hit-and-miss as rules for happiness, or rules for art, but the fundamental observation—that iPod is a smash in large part because of its inherent cool factor—points to a giant challenge for Microsoft.
The popularity of a closed system is determined by its ability to fulfil on the expectations of the customer (and not because IBM annoints you as the perferred OS for their new PC thingy). In a mass consumer electronics market where the only performance concern is battery life (you can't meaningfully claim music performs better—3x faster!—on one digital audio player over another), and there's no exclusive content advantage (all online music and media stores come to offer basically equivalent catalogs over time), Microsoft can't just say "Newer! Better! Faster! More! Now with Office for Zune!" It comes down to the customer's personal, inarticulate desire. If that desire is for "anything but an iPod," Microsoft's in luck. If it's for "something cool, like an iPod," then Microsoft has to hope there's something about the Zune people aren't seeing yet.
In the last couple of years, hundreds of other Internet start-up companies in Silicon Valley and elsewhere have followed a similar trajectory. Unlike most companies formed during the first Internet boom, which were built on costly technology and marketing budgets, many of the current crop of Internet start-ups have gone from zero to 60 on a shoestring.
In a rare move, 
In discussing the rationale for the royalty, Chris Stephenson, general manager for global marketing in Microsoft’s entertainment unit, said the company “needed people to rally behind” the new device and service.
Apple today unveiled its new