Opinion - What Microsoft must do now to compete against Apple's new iPods

Realistically, Apple didn't really need to do what it did on Wednesday to maintain its stronghold on the MP3 player market. After all, the iPod (in all of its variations) has something like a 75% market share. Other big names have attempted to challenge the iPod, but most simply could not compete against the marketing juggernaut headed by Steve Jobs.

The Zune was Microsoft's answer to the iPod. It took everything that the iPod Video had — a large hard drive, color screen, and so on — and added WiFi connectivity. Sure, the wireless sharing was a little crippled, but it was something that Apple did not have. Bill Gates hoped that this would be enough, and while it didn't quite topple the iPod, the Zune showed that Microsoft was serious.

So, what can the Redmond, Washington-based company do now that Apple has a whole new family of iPods? What can Microsoft do to respond to these latest creations in such a way that they outdo the new 3rd generation iPod nano, the iPod Classic, and the iPod Touch?

Destroy the iPod Classic

Let's start with the obvious competition. The Zune and the iPod Classic are fundamentally the same device. To compete against the new iPod Classic, I feel that Microsoft should take a five-pronged approach.

1. More space. The current Zune has a mere 30GB of memory and this was on par with the iPod Video at the time. Now that Apple has bumped the capacity to 80GB and 160GB, Microsoft finds itself playing catch-up. For the next-generation Zune, they need to push the storage space much, much further. Sell the new Zune with at least 250GB.

2. Keep the massive screen size. One area where the Zune dominated the old iPod Video was the size of the screen. If you want to watch videos on the go, you don't want to squint.

3. Lose the chubby. The current Zune is fat, chunky, and heavy. While the "double shot" casing is cool, the Zune isn't much of a looker overall. Slim is in and the next Zune needs to be more fashionable.

4. Stereo Bluetooth. Even the iPhone doesn't have this. Wouldn't it be great if the next-gen Zune had Bluetooth A2DP? Wouldn't it be even better if stereo Bluetooth headphones were included for free?

5. De-cripple the WiFi. Instead of restricting what the WiFi radio can do, why not allow consumers to synchronize their music libraries wirelessly? That would be a HUGE selling point.

Where's the Zune Nano?

I know that it's not advisable to become the jack of all trades and the master of none, but because there was no smaller version of the Zune available, Microsoft lost a huge chunk of the market. I personally enjoy the 2G iPod nano much more than the 5.5G iPod Video, simply because of its physical size.

Now that the new nano is even smaller, Microsoft needs to make something that people will want to use while jogging or at the gym.

Produce a flash-based Zune with loads of storage, a color screen, and maybe even a wireless radio or two. Wouldn't it be awesome if the Zune Nano (or whatever you want to call it) had WiFi like its bigger brother? Wouldn't it be cool if it had a giant touchscreen? Flash memory is getting cheaper and (physically) smaller. It's time to capitalize.