Microsoft hasn't proven anything, since the Zune is a repackaged Toshiba GigaBeat S - only slight modifications.
1. Large screen - well, that hasn't helped the GigaBeat S, since it has failed to make a dent in the iPod's sales. And a large screen means a bigger device, which people have emphatically demonstrated that they do not want.
2. Some people have been very vocal about wanting the FM tuner, but Apple keeps surveying their customers and a tuner isn't high on the list of what their actual customers want.
3. Um, the buggy screaming pig on Windows? Other than the OS itself? And the Zune software appears to have even *more* problems than that. iTunes/Windows looks like a shining example of reliability compared to that.
It should also be noted that while the screen is physically slightly bigger than the iPod's, it contains the exact same number of pixels. So you're not getting any extra screen real estate, and you also get the added benefit of having most of your videos stretched out of proportion. Go Microsoft!
Actually, what I'd like to see is an AM tuner. I think it's pretty self-evident that the reason most people carry around MP3 players is to avoid generic FM radio in the first place; besides, if you want to listen to the radio, you can do that with a Walkman that costs $15 and has the tuner built into the headphones. But at least an AM tuner would let me quickly switch over and get a talk radio fix if I felt the need.