The news today that the new Zune's from Microsoft were outselling Apple's own enigmatic iPod on Amazon.com got me wondering if this was some sort of trick by Microsoft to create artificial scarcity and repeat their smash of the Xbox 360 or if the player had finally caught on with consumers.

Introduced only a week ago, by this morning Microsoft 's heavily discounted, 30-gigabyte, $134 Zune digital media player was ranked the No. 1 bestseller in the Seattle online retailer's list of top-selling MP3 players in the "Electronics" category. Apple's four-gigabyte iPod nano was No. 2, followed by Apple's 80-gigabyte iPod "classic" at No. 3.

Last week, the Redmond computer giant introduced a new 80-gigabyte Zune player, but they're hard to find. Amazon's site on Monday said they're "temporarily out of stock" and no future shipping date was listed. Microsoft's own Zune site said the 80-gigabyte player can't be ordered until "early December."

In more ways than one, the new Zune's take a strong set of differentia from the first generation and execute more effectively while adding features that truly make it a hipper product. USAToday had a review recently:(read more)

After many complaints and lost sales due to the high price of Sony's PS3, the decision to drop the price by $100 has brought the PS3 to a price more consumers might be willing to pay.

While Nintendo believes it won't affect the sales of the Wii because the PS3 is still double the price, Microsoft's best Xbox 360 product is only $20 cheaper which creates a much bigger threat on that front to Microsoft.

The PS3 initially overshot market demand when Sony launched what is objectively the best quality graphic gaming console ever on the market. Although the product was attractive to consumers, a leveragable cluster of market demand was not willing to part with $599 for the experience of even radically incremental improvements in performance, however the $100 decrease in price have increased PS3 sales by 135 percent.

As competition increases in the game console market, understanding the market demand curve is key because Sony has just crossed it. Because consumers were happy with the slightly less impressive Xbox 360, at $20 below than the PS3; so Microsoft will have no other choice but to cut their prices, possibly creating a price war in an already speciously profitable business of gaming consoles in order to drive sales of the real profit engine, the games themselves.

Spinning the absence of a software development kit (SDK) for the iPhone, Jobs suggested that AJAX and other open standards UI programming principles for the Web would allow developers to create content that looks and behaves exactly like apps and would further mean users and developers alike wouldn't have to compromise on security, reliability or, for that matter, the ecosystem strategy Apple is grafting onto the iPhone from its hegemonic iTunes/iPod franchise.

Worldviews matter a lot - maybe more than anything else - when it comes to competitive strategy. This was highlighted last week as Viacom launched a copyright infringement lawsuit against YouTube and Google claiming $1 billion in damages from the 150,000 clips of their content (in particular, the vast library of MTV programming) that has been collectively viewed more than 1.5 billion times.

Viacom claims that, although YouTube does remove such material if asked, the Google-owned company deliberately puts the burden on the copyright holder, and makes it unreasonably difficult for copyrighted works to be removed. This has led to the fantastic gains in traffic, trending momentum that amounted to a valuation in Google's acquisition of YouTube of $1.65 billion when the companies merged a few months ago despite YouTube's "immaterial" contribution to Google's revenue mix.(read more)

Well, as my first conference on Prediction Markets this one left me a little puzzled, even with James Suroweicki and Robin Hanson there in person. So here are my thoughts, questions, and reactions to what was presented, talked about, questions asked and examples thrown out to us.

What seemed a way to learn about the concept and applications, successes and failures, ended up being a way for Google, Yahoo and other vendors to tout a process they just happened to have new tools for. The 4 hours seemed to be for the "true believers", and really glossed over PM 101, even though presentations by both Surowiecki and Hanson were meant to address the basics of the concept.

Reps from Microsoft and HP really had the most valuable lesson for me - they have been testing prediction markets in various forms and for various business functions, but neither are using them to make real business decisions at the group, department, business unit or corporate level. Yes, the markets can be very accurate, more so in many cases than internal and external "experts" (PM's are cheaper, too!), but no, they aren't taking over from the more entrenched ways of forecasting and decision making.

I heard a lot about how to get people to trade in the market, pros and cons of real money vs. other forms of "payoffs" (social standing and reputations), how to address the issues of risk attitudes and "quality" of trading over time (people getting it right, or close to it).

One really useful set of thoughts came from Adam Siegal of Inklingmarkets.com - lessons learned as to why PM's will fail within any group:

1. No concept of what a PM is
2. Using software that is too complex and not easy to use, to set up, trade in and run a market
3. Market structure was wrong
4. Asking for an opinion - questions must be quantifiable, even if just yes or no
5. Description or rules of the market not clear/understood by the trading populous
6. Questions posed are biased
7. Time frame of the market is too long - apathy over time and the market becomes static
8. No information is available for the traders to make a reasonable judgement - trades are based on information and knowledge (duh!)

Now this last one really struck me - I thought the whole idea in a PM was to bring out hidden tacit knowledge in an organization in a way to focus it on an issue or challenge to meet a specific business need. It would seem that there is a issue here of simply bad selections of the trading group members. I would also say there is a real issue on selected traders vs. self selected traders?(read more)