Is steve really worried, when you look at Zune he has to worry. Because all the previous ipod competitors have been small compaines and hardware companies now they will be competing with a hardware and software company so how long can the itunes advantage last.
Zune itself has everything ipod has but even better. Bigger screen, customisation, wifi, software to support the eco system. And the advertisiing dollors to back all this up.
He is worried and if apple doesn't do something quickly and radically they will have to hand over the market like they did with pc's pretty soon to Microsoft via Zune.