Analyst Gives Zune Thumbs Down

Microsoft’s Zune isn’t even in the hands of testers yet but already one analyst is giving it a thumbs down, mostly due to its possible hardware legacy.

A research report from American Technology Research on Wednesday declared the Zune “underwhelming” and could end up “another classic case of overpromising and underdelivering” by Microsoft .

ATR analyst Shaw Wu wrote in a note to investors that Microsoft “had hinted of an all-new design from the ground up, but from our analysis, it appears that the Zune is essentially a repackaged Toshiba Gigabeat that has seen limited success.”

Earlier this month, Toshiba received FCC approval of a new device, the Toshiba 1089, which is widely believed to be the Zune. The unit sports a 3.0-inch TFT LCD display, FM tuner, a USB 2.0 port, a 30GB hard drive, and 802.11b/g Wi-Fi.

A photo of the device accompanied the FCC approval, and it bore a very strong resemblance to the Gigabeat, a handheld device that integrates with the Windows Media Center PC.

Wu said he is unimpressed by Zune’s fake clickwheel, which “does not scroll nor is touch-pressure sensitive, making navigation difficult, particularly for users with large music, video and photo libraries.”

The Gigabeat had a X/Y axis set of arrows used for navigation instead of the touchwheel that is a hallmark of the iPod. Wu said he felt the touchwheel may be difficult to replicate without infringing on Apple’s extensive patent portfolio.

Wu did not return calls asking for comment by internetnews.com, and Microsoft, as would be expected, declined to comment. Matt Rosoff, analyst with Directions on Microsoft, feels the report was premature, because the real proof will be in the Zune’s interface.

“The Gigabeat is a portable Media Center device. Microsoft hasn’t revealed a lot, but I believe they are going to completely redesign the user interface. The software and user experience will be different,” he said.

Rosoff felt that the software will make the difference and the hardware itself isn’t that important.

“If Microsoft offers a smoother software experience than Windows Media Player and has a better store built into it, then they could take some marketshare from Apple,” he said.

But if Zune is just another Windows Media Player device, then it will be just another also-ran. For now, he said there is too much that isn’t known about the Zune.

“It’s a little early to be passing judgment,” said Wu.