For the last week, I’ve been carrying around both the Zune HD 16GB and the third-generation iPod Touch 32GB, earning quizzical glances from any number of fellow subway riders as I listen to one device and then, midway through my commute, often switch to the other. (Parts 1 and 2 of my “Zune HD vs. the iPod Touch” matchup can be found here and here.)

A part of Microsoft’s corporate strategy seems to be:

A.) Analyze the competition

B.) Adapt software or devices to match and/or surpass the competition’s functionality

C.) Profit (maybe)

Many of its recent initiatives, from Bing to the upcoming retail stores, certainly seem to follow this pattern–and so does the Zune HD, which seems very Apple-like both in terms of the device and the broader Zune ecosystem.

With regard to the physical devices, the Zune HD and the iPod Touch battle to a near-draw. The iPod Touch wins in the aesthetics category, if only because the smoothly planned back feels less blocky in the hand, while its slightly heftier weight makes it seem like less of a throwaway item. But with regard to functionality, sound fidelity, battery life, and video, neither device boasts a substantial advantage over the other–except for the Zune HD’s radio, although I heavily suspect that feature may be matched by the next-generation iPod (it’s already available with the iPod Nano).

The one advantage that the iPod Touch possesses is its ecosystem. Microsoft recently switched strategies, and now seems to be angling to turn Zune into more of a cloud-based endeavor than a device-centric undertaking, but Apple’s ecosystem is far more mature. The sheer number of applications available through iTunes puts Zune’s online offerings to shame.

Microsoft has plans, though, to integrate more gaming and video experience with the Zune. If Redmond manages to figure out how to best merge the Zune HD with Xbox Live, then it could hit the sweet spot of brand synergy; at the very least, dedicated gamers would give the device a second look.

The iPod Touch still has more business-related Apps, though, which give it yet another advantage over the Zune HD. Granted, most people will probably use their iPod for video and music, leaving other mobile functions for their smartphone, but the fact that the option’s there for the taking is enough to give Apple’s device a leg up here.

If I were running Microsoft’s Zune division, I would also consider making Zune’s software compatible for Mac. After all, when Apple made the decision to open iTunes to Windows, it enormously expanded the potential audience for the iPod. I doubt there would be a similarly seismic effect if Zune allowed itself to be loaded onto MacBooks, but I also think there’s enough apathy out there towards iTunes–every system has its detractors–that at least a few people might be tempted to make the switch.

More: continued here

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