Zune Thoughts: Should Microsoft Started Smaller?

"Looking both at these Amazon rankings and the iPods I see people using out on the street on a daily basis, I can’t help but think that Microsoft copied the wrong iPod. The Nano is the sweet spot for Apple, and it’s the Nano-ish players from competitors that are registering in the sales charts."

This article from Daring Fireball brings up a good point. The top of Amazon's Bestsellers list for MP3 Players is dominated by the smaller flash based players such as the Nano and Sansa with a scattering of larger hard-drive based units. Considering Microsoft's decision to enter the market with only one model, was the 30GB level the right choice? Would Microsoft have been better served by first introducing a Nano competitor? Do you think the first model introduced was a conscience decision on the part of the Zune team, or was it a matter of facilitating the launch by reusing the basic design of the Gigabeat?