[doogald]

I don't know - do you really think that success with the Zune is critical to Microsoft's business going forward? If so, then, of course, it's definitely worth taking a significant gamble and just going full bore. However, if Microsoft can survive if the Zune fails - and I think that this is the case, but you may disagree - then doing a market test (in a huge market, of course) is a great way to see if this thing will have some traction.

It seems obvious that simply having a product with some better features at a slightly better price than the market dominator was not enough to cut significant market share. The Zune HD looks to me as if Microsoft is doing a reset on the business - dropping all previous form factors, etc. With a brand reset, they gain momentum by introducing this product with significant product differentiation and, I would hope, significant marketing/advertising.

So, they do the reset; it should be easy enough to gauge success, failure or fizzle within a sales quarter. If it is successful enough, then they ramp up into other markets (and they can start doing the drudge work now - that can always be abandoned later on.) That seems smart to me, for something that is not necessarily critical to the company's future. If this device, which has significant feature differences from the iPod Touch, does not gain US share, there is no point pissing away money.

And I think thatthe EU is more than adding another market - there are separate agreements that need to be made in each of the member countries, if I remember iTunes' expansion correctly.