I'm not a big fan of Cringely's but I do enjoy this particular insight. It is unclear to me that Microsoft is even in the same game here because of their lack of content.

Specifically Amazon innovated in the book space, its in their roots and they have leveraged the crap out of it. Apple if you recall innovated in the music space. The similarities are stunning, take something people continually consume, is fashion driven, and reduce the friction of that consumption, golden. The 'chunkyness' (in terms of price per transaction) is bigger in books than in music but the mechanisms are similar. All we need now is NetFlix to introduce a dedicated 'video' device, then move up to phones and tablets.