Zune dancing to a different drum machine

For now at least, iPods remain dramatically more popular. Apple snagged 71 percent of MP3 player sales from January to September of this year, to Microsoft's 3 percent, according to market researcher NPD Group. Apple says 160 million iPods have sold since their 2001 launch, while Microsoft reports 2.5 million Zune sales since the 2006 debut.

The Zune's distant runner-up status aside, Stephenson said the Zune has found better-than-average success among blacks, Hispanics and 18-to-24-year-olds, though he wouldn't go into specifics. Encouraged, the Zune team has sharpened its marketing to those constituencies.

Common, a brand-savvy rapper and actor willing to team up with big companies — he promoted Gap clothing in a 2006 holiday commercial — is an apt poster child for Zune, because he appeals to hip-hop fans but also plays well in the mainstream. A second TV spot features Tennessee rockers Kings of Leon talking to The Band's Robbie Robertson, a nod the college-age indie music crowd. Online, Zune ads feature lesser-known artists. In keeping with the theme of the current campaign, discovering new music through connections, Zune is using Web ads to promote Mr. Hudson and The Stills, groups suggested by Common and Kings of Leon.

Playing to its strength among Hispanic consumers, Microsoft in September made an exclusive deal to sell digitally remastered albums by some of Fania Records' biggest names, including the Fania All-Stars and Celia Cruz. The company also started working recently with Univision, which now devotes a section of its Web site to promoting Zune's Latin music collection.

In contrast, Apple's marketing tends to be more about the iPod itself, pairing catchy anthems with images of the iPod, not artists. Apple had no comment.

Despite their differing marketing approaches, Microsoft and Apple are, in the end, after the same thing: getting consumers hooked on the one-two punch of software and hardware. Apple seems just as busy keeping its iTunes software fresh, including the recent addition of a "genius" feature that builds music playlists on the fly, filled with songs related to one that's currently playing.

And given Apple's success, it's not clear Zune's tack — giving consumers connections to the music itself, and pushing the Zune's software more than the device — can help it close the gap with Apple.

But the strategy is helping Zune make progress on one very important front: outrunning Microsoft's awkward, uncool vibe, which has clung to everything from the long-delayed Vista operating system that failed to wow, to that first clunky brown Zune.

Also in msnbc.com business Frustrated shoppers put credit cards away, pay cash MoorHead: New Audi R8 is a refined land rocket Open House: Homes for sale in a winter wonderland ConsumerMan: It's a ruby ... but it's not the real thing   Video: Christmas music sales are booming this holiday

MORE FROM U.S. BUSINESS

U.S. business Section Front

Automakers, banks slapped with pay limits SEC widens probe into BofA, Merrill deal CNBC: Two economic bubbles defined his life   Craigslist founder: Never saw eBay's ad site One year later, Madoff case is far from over House poised to back financial rules overhaul Bailout for Main Street instead of Wall Street? Craigslist founder testifies eBay broke promises McDonald's serving up breakfast dollar menu Goldman execs to forgo cash bonuses in 2009 U.S. business Section Front   Add U.S. business headlines to your news reader: