This article from The Wall Street Journal is more of a review of Microsoft's (MSFT: sentiment, chart, options) latest offering in the world of digital music players than an analysis of the company's stock, but the correlation between the stock and the Zune music player was just too tempting to pass up. The authors begin by comparing the new Zune to the older generation models, noting that controls, battery life, and user interface have greatly improved in the new release. Prices for the new models range from $150 to $250, and while the 80-gigabyte Zune is available only in black, the others come in red, green, black and pink.

The article then goes on to compare the new Zune models to Apple's (AAPL) iPod. While the prices are very competitive with the 80-gigabyte and 4-to-8 gigabyte models matching up nicely with Apple's models that is where the similarity ends. According to the article, "Unfortunately for Microsoft, Apple hasn't been standing still." While the Zune has Wi-Fi and FM (features missing from the iPod), "Zune software can't create smart playlists. And it only offers two views, Browse and List, versus three in iTunes: Cover Flow, lists, and lists with album art."

In the end, the article sums the new offering up by stating that "Microsoft has greatly improved the Zune hardware and software this time. But it seems to be competing with Apple's last efforts, not its newest ones."

The final sentence of the article struck home with me. While I am an early adopter of the Vista operating system, I always feel a step behind Apple's latest and greatest OS - in this case, Leopard. Furthermore, Microsoft's Zune player arriving on par with Apple's earlier model iPods is a fitting description to the company's recent struggles. Despite the firm's impressive earnings report just weeks earlier, Microsoft is still number-2 in a lot of ways: its Xbox 360, Zune, and Vista quickly come to mind as ranking second to Nintendo's Wii, Apple's iPod, and Apple's Leopard.

This "second place" theme is also hampering the company's stock, which until the most recent earnings report had been locked in a trading range between the 24 and 30 levels since March 2002. The equity is now trading near a multi-year high, but recent volatility in the technology sector has the shares pulling back toward the upper rail of their former range. Again, a nearly second-rate rally attempt.

Sentiment is also second-rate for MSFT, which translates to many contrarian investors as complacency. The stock's Schaeffer's put/call open interest ratio (SOIR) is the one bright spot, with the current reading ranking above 96% of all those taken during the past year. However, short interest represents a paltry 1% of the stock's total float, and 13 of the 18 analysts covering the shares still rate them a "buy." With little for investors to get enthused about in the company's offerings, and little in the way of sideline money (as represented by investor pessimism), Microsoft shares remain only a second-tier investment choice when compared to the likes of Apple. The company is improving, as are the shares, but there is still a bit of catching up to do.