The company's Zune project is an effort to make inroads against Apple. The first Zune device will be released in the U.S. this fall with products designed to complement Microsoft's Media Center PC software, Xbox 360, Xbox Live, MSN and Windows Live initiatives.


Microsoft Corp. outlined on Thursday its strategy for taking on Apple's iPod and iTunes juggernauts with its own digital-media devices and service -- saying that the "Zune" project will be long and expensive but ultimately worthwhile.


"It is something that is going to take time," acknowledged Robbie Bach, president of Microsoft's Entertainment & Devices Division, in his first public comments since the company confirmed the project's existence last week.


Bach predicted development and marketing costs of hundreds of millions of dollars, and said it's not as if the company will be able to conquer the market in six months. "This is something that's going to be a three-, four-, five-year investment," he said.


Microsoft spent the rest of the day trying to convince Wall Street analysts that it has some other interesting stuff up its sleeve in the meantime.


The occasion was the company's annual financial analyst meeting, a daylong gathering in Redmond where Microsoft describes the state of its businesses and their prospects. The company showed upcoming software, including Windows Vista and Office 2007, and detailed plans in emerging areas such as video games, online advertising, mobile devices and business software.

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