What you should know about me before you read this: I am a Mac user, I have a 3G iPod, and I’ve never bought a DRM’ed song from any music store.

Engadget has a picture of Microsoft’s “iPod killer” the Argo. Take a look here.

I took a look at the comments and they were mixed. There were plenty of “iPod rip-off!” comments due to the design of the Microsoft player. The MS player has a wheel interface. While Apple has used the click wheel with great success, they did not invent the wheel. Let’s face it, the Apple iPod has a fantastic interface with an ingenious physical device. The wheel is a brilliant device.

I suspect that the iPod has become the template. There is no reason to improve the interface. Apple got it right. Almost every remote control has the same interface – a keypad and maybe an LCD touchscreen. VCRs have the same physical attributes. Portable tape players had a line of buttons with play, pause, fast forward, and rewind. If the Internet was around 30 years ago, there would be forums and comment threads about how everyone is ripping off the Sony Walkman.

Give me a break. At the end of the day, marketing plays a greater role than the device. The original iMac had problems, but because it was different it succeeded. It made computers seem less scary.

Microsoft needs its XBOX division to market its new player. I fully expect the OS on the little device to be excellent. Microsoft knows operating systems. Don’t believe me? Take a look at the Palm Treo. Palm makes the competing handheld OS and even they run Microsoft’s Windows Mobile OS. A simple copy of the media center experience will function well.

There is also a rumor of Wi-Fi in the device. I don’t care how great the iPod is, it doesn’t have Wi-Fi. I have to find my special cable and sync up with my Mac. My music device should download podcasts on its own. I don’t want a docking station. Wi-Fi makes this very interesting. The next step is video. Microsoft has its Media Center. If you could transfer your shows from Media Center to Microsoft’s portable player – that’s a tremendous amount of video. Plus, if you could download trailers from your XBox 360 onto the player, that’s more content.

The iPod with video lacks higher quality video. Microsoft with its Media Center (and Front Row doesn’t come close to Media Center’s functionality) and XBox 360 has a ton of high quality video content that could easily be put onto a portable device. High quality content for cheap? That’s a great idea.

The physical dimensions of the device will also play a huge role. If it is bulky, it will fail. Either way, I think Microsoft may have a winner. They are not as irrelevant as many think. People ask, “What does Microsoft know about hardware?” Well, how many of you have Microsoft keyboards, mice, and that little thing called the XBox and the 360? If Microsoft provides a product that is different, it may succeed. If it does not differentiate itself, it will be an also ran.

Microsoft has quietly become the dominant force in online gaming. Live Anywhere will work. If Live Anywhere is a feature of “Argo” or “xPod” – it will be greatly beneficial to Microsoft. Competition is a good thing.