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Robbie Bach, president of Microsoft's entertainment and devices group, told analysts that the company does not expect an immediate pay-off from what has inevitably been dubbed the 'iPod killer'.

'This is something that's going to be a three-, four-, five-year investment horizon,' Bach said during a meeting in the company's Redmond HQ.

The key to its success, he said, will be the way it integrates with Microsoft's expanding digital home strategy, comprising Media Center PCs, Xbox games consoles and new television technologies.

In an oblique reference to Apple, Bach insisted that Microsoft is 'not just introducing Zune to do the same thing that other people do.'

That said, Zune adopts a very Apple-like, un-Microsoft closed system approach; the technology will not be licensed to other hardware manufacturers.