Microsoft made the Zune because partner hardware "sucks"

via engadget

Thanks to yet another Microsoft antitrust suit in Iowa, subpoenaed emails have revealed a moment of candidness and clarity at Microsoft in 2003 when Jim Allchin (Co-President, Platforms & Services Division, depicted left) and Amir Majidimehr (Corporate Vice President, Consumer Media Technology Group) had an email thread that basically summarized the portable media device playing field then, and for the most part, now. Some choice quites from the email back-and-forth:

Jim: title "sucking on media players"; regarding a current Creative player (probably a Nomad, perhaps a Zen Touch): "My goodness it's terrible... What I don't understand though is I was told the new Creative Labs device would be comparable to Apple. That is so not the case."
Amir: "Now you feel our pain." He suggests giving cash bonuses for partners that come up with decent devices. In the instance that doesn't work: "it is time for us to roll up our sleeves and do our own hardware."

And of course so they did, with great hype and great failure to immediately capture market share, the Zune was born many years later -- far too late by most accounts, but hey, you've gotta start somewhere. Still, it's funny to think that for these guys rolling up their sleeves and doing their own hardware means taking an off the shelve portable media OS (PMC 2), getting Toshiba to make a modified Gigabeat, and cutting some seriously anti-consumer deals with major labels.