But M$ is no doubt willing to lose billions with a capital B to hurt Apple. I wouldn't plan on the Zune going away any time zoon.
I wouldn't either.
While I think the actual device is going to suck, and it won't make much of a dent in Apple's dominance in this market for some time, I'm starting to believe that Zune buyers will gradually grow over a long period.
It will NOT be because the Zune will become a better device than the iPod, though.
No -- the reason people might buy a Zune will be SOLELY due to the fact that iPods are over-saturated. And there is always that segment of the population who will gravitate towards something -- even if it's an inferior product -- simply because the majority isn't. They hate the fact that everyone owns an iPod, and they will choose a Zune simply to "be different." Or at least fool themselves into thinking they're different.
I know... it's a silly reason to choose a Zune. But it's the ONLY thing that might keep the Zune around and not die a quick death. (I can't tell you how many people I know who listen to REALLY crappy unknown bands with zero musical talent, and the only reason they give for being fans is that "no one else is listening to them.")
But to go back on-topic again, I think Apple feels no need to rush out a 6gen iPod -- just like they feel no need to rush out Leopard to steal Vista's thunder. Their main concern is putting out a quality product, not rushing to compete with products they know will be inferior.