First Microsoft went after Apple with the laptop hunter ads that jabbed Apple for expensive laptops. Now it's going after iPod. In this latest ad, "The Apprentice" contestant and financial planner Wes Moss claims that it would cost $30,000 to fill an iPod with music, but only $14.99 a month for the Zune's subscription service.

More breakdown on the cost:
Zune, 120 GB = $249.99
iPod Classic, 120 GB = $249

Here's the ad below:

Update 5:28 p.m.: The ads are only running online.

Also, the $14.99 Zune Pass subscription includes 10 songs that can be added to the owner's permanent subscription each month.

• TechCrunch has the latest search traffic stats for the first quarter that show Microsoft losing 1.1 percent over the same period last year.

• New York Times says Yahoo may be planning more layoffs.

• Mary-Jo Foley at ZDNet is speculating on plans for a Zune phone, code named Pink, to compete with iPhone.

A nugget from the BBC's blanket coverage of the G20 summit and President Obama's first visit to the U.K.:

"The BBC's Peter Hunt says: President Obama has given the Queen an Ipod during their private meeting at Buckingham Palace. It contains footage of her state visit to the US in May 2007. The Queen has given the president a silver framed photograph of herself and her husband. The official picture is what she gives all visiting dignitaries."

Recall in December the flurry of speculation after Obama was seen working out in a Philadelphia gym listening to a Zune. An Obama spokesman was quoted at the time saying, "Not true, the President-elect uses an iPod."

With Microsoft's Redmond campus largely emptied out for the winter holidays, CEO Steve Ballmer crunched the numbers on the proper level of spending for his company against the current economic climate, which he has repeatedly referred to as a "reset" rather than just a recession. Ballmer said his own estimates for the weakness and duration of the downturn tend to be more severe than those of other business leaders he meets.

With that in mind, he settled on $27.5 billion of operating expenses -- a level the company aims to hold relatively steady through the current fiscal year, which ends June 30, and during its 2010 fiscal year. Ballmer made clear to financial analysts meeting in New York this morning for the company's annual strategic update that cutting back even more significantly -- say to $20 billion -- would be "imprudent."

"I think this is right," Ballmer said.

That should give some comfort to those wondering if the modest layoffs Microsoft announced last month were the beginning of a more significant reduction. Wall Street analysts and investors are pressuring companies in every industry to continue cutting costs as sales and profits slow dramatically.

The strategic update call just came to an end. Ballmer gave a detailed look at seven major business areas for the company. Check back here later this morning for more details.

Update, 7:50 a.m.: As he told Congressional Democrats earlier this month, Ballmer said Microsoft's corporate strategists have been evaluating past downturns -- particularly those driven by "deleveraging." The team read company annual reports from 1927 to 1938 to determine who did a good job managing through the Great Depression. "RCA, God rest them in peace, became our role model," Ballmer said. The company was able to dominate the television business because it continued to invest during bad times, he said.

Then he broke down how Microsoft plans to invest.

Students visiting Microsoft for the company's Minority Student Day pressed Robbie Bach, president of the company's Entertainment and Devices Division, to talk about the future of some of his division's most recognizable products. In this post, I covered what he said about the next two generations of Windows Mobile. [Update, Feb. 23: I've added the name of the student who asked the question highlighted in this post.]

Zune, Microsoft's music player, was another hot topic. This morning, CNET reported on changes in the organization of the Zune team.

One student, Marian Abdullahi of Kent-Meridian High School, asked, "I was wondering if you plan on making a touch-screen Zune?"

Bach: "Ah, a question about whether we're going to make a touch-screen Zune. I won't talk about future product things that we're doing explicitly, cause that will get me in trouble with a lot of people.

CNET's Ina Fried reports that on Jan. 22, Microsoft split its Zune digital music team in two: one focused on the software and services, which it plans to expand onto other, non-Microsoft devices, and another focused on the Zune hardware.

[Update, 12:34 p.m.: Added comments from Robbie Bach, head of Microsoft's Entertainment and Devices Division, on the rationale for the change.]

LAS VEGAS -- Robbie Bach, president of Microsoft's Entertainment and Devices Division, talked about layoffs ("you won't hear us comment"), the great 2008 for Xbox and its impact on profitability, Microsoft's deal with Verizon Wireless (creating a good mobile search experience is the key), where entertainment fits in Microsoft's mobile strategy and more. Read on for a condensed transcript of my conversation with him Wednesday afternoon.

Comments on this post at the official Zune Insider blog indicate that the 30-gigabyte Zunes that failed on Dec. 31 have come back to life today. One person wrote:

"Woke up this morning, plugged in my Zune, waited 5-6 minutes to get a charge. It booted, all my content is there, I watched a movie and life is back to normal. Happy New Year!"

Instructions for reviving a frozen Zune are here. Anyone else still experiencing problems?

[Update, Thursday 8:33 a.m.: It appears the fix worked. Details here.]

Microsoft just issued the following statement explaining the outage that has affected thousands of Zune music players today:

"Early this morning we were alerted by our customers that there was a widespread issue affecting our 2006 model Zune 30GB devices (a large number of which are still actively being used). The technical team jumped on the problem immediately and isolated the issue: a bug in the internal clock driver related to the way the device handles a leap year. That being the case, the issue should be resolved over the next 24 hours as the time change moves to January 1, 2009. We expect the internal clock on the Zune 30GB devices will automatically reset tomorrow (noon, GMT). By tomorrow you should allow the battery to fully run out of power before the unit can restart successfully then simply ensure that your device is recharged, then turn it back on. If you're a Zune Pass subscriber, you may need to sync your device with your PC to refresh the rights to the subscription content you have downloaded to your device."

Microsoft offers more details on the cause of the outage here.

[Update, Thursday 8:33 a.m.: It appears the fix worked. Details here.]

[Update, Wednesday 2:05 p.m.: Microsoft just announced the problem was likely caused by a bug in the internal clock related to leap year. See this post for more details.]

Reports are streaming in from around the Web of Microsoft's 30 gigabyte Zune media players failing all at once. Here's one man's description, consistent with thousands of others posted on a Zune forum and in comments to blogs:

"I turned on my Zune a few hours ago, and the start-up screen appeared. The progress bar went across the bottom, and stopped at 100%

"And it just sits there."

The Zune team is issuing the following statement:

"We are aware that customers with the Zune 30GB are experiencing issues with their Zune device. We are actively working now to isolate the issue and develop a solution to address it. We will keep customers informed on next steps via the support page on zune.net (zune.net/support)."

Clearly, this is not the kind of consumer electronics news story Microsoft wanted to see one week before its chief executive and entertainment and devices president take the stage at the Consumer Electronics Show.

Update, 10:45 a.m.: Matt Rosoff, a digital music expert and analyst with Directions on Microsoft in Kirkland, checked his 30 gig Zune this morning and confirmed, "I've got that pink and black screen of death." Rosoff has a theory about what's gone wrong.

IBM has created a "Microsoft-free" desktop, according to The Wall Street Journal, which is "a complete suite of applications that run on a backroom server and don't require Microsoft software or costly desktop hardware." The combo of a Linux OS and IBM thin-client office software will cost from $59 to $289 per seat, a savings of $500 to $800 over a Microsoft desktop with Vista, Office and collaboration tools, according to IBM estimates.

Cross posting from Brier Dudley's blog:

Microsoft's Zune still isn't going to catch Apple's iPod, but you've got to give the group credit for creative approaches to music licensing.

Zune is announcing Thursday that people who subscribe to its $15 per month Zune Pass subscription music service will be able to download and keep 10 songs a month. It also cut device prices earlier this week, with the base 4 gigabyte model falling to $99 from $129.

More details are here.

Microsoft faces a tough challenge in keeping a lid on the updates to its line of digital music players. The company has to get the devices out to the retailers who sell them to consumers and apparently those retailers don't always abide Microsoft's schedule.

The portable music player war -- such as it is -- looks to be heating up. Microsoft is working on a 120 gigabyte Zune, according Zunerama, an enthusiast site. (Hat tip to Matt Rosoff, of Directions on Microsoft, writing at CNET.)

Meanwhile, Apple has scheduled an event for Sept. 9 that has all the markings of a new iPod launch.