If the rumors are true, the Microsoft Zune is dead. Microsoft is thus far neither confirming or denying the rumor, and the software itself will definitely live on, but the prevailing sense is that the hardware has gone the way of the Dodo Bird.
Microsoft made some key mistakes with the Zune, some of which make the video produced by Microsoft employees prior to the Zune launch all that more funny. The original design of the Zune was nothing short of atrocious. Remember, one of the original colors was brown. Yes, brown. How many people in the world want a gadget that slightly resembles a UPS truck?
While the performance of any device should be the deciding factor with any gadget, there is definitely something to be said for the appearance as well. This was an iPod World by the time the Zune made its debut in 2006, and, to be blunt, the looks of the Zune was going to be the first thing people judged it on. No matter how much those of us who read sites such as TechnoBuffalo may think specs make all the difference, your average Walmart shopper is still the one who needs to be won over. You could either have what appeared to be a nicely designed iPod, or you could get yourself … a brown Zune. (yes, I know it came in more colors)
The Zune HD was a vast improvement in design, but by that time the brand name was already pretty much tarnished. People associate it with an "also ran" in the personal media player market. The iPod Touch had already secured a good position for itself, and it looked like Microsoft was doing nothing but playing catch up to the Apple counterpart.
Again, the death of the Zune hardware has not yet been confirmed by Microsoft, but even if it isn't dead, does it even matter any more? Microsoft could be putting that research and development funds into far more lucrative product lines where it is decisively succeeding such as with the Kinect controller for the Xbox 360. Should a company, even one the size of Microsoft, continue to throw money at a product that only captures a tiny portion of a market? My answer if I was one of the accountants at the company would be a resounding, "no".
We'll see where this all ends up going, but I would have to say that if the Zune truly is dead, it's Microsoft that has its self to blame with poor design and marketing.