This has been a long time coming. Microsoft's chief problem is that they competed head-to-head with the iPod price-wise without any compelling reason to choose their product over the dominant one and its ecosystem. The Zune was never far and away better in terms of features, was the same price, and lacked the value-add of the iPod coolness factor and dominant ecosystem. That made it a bad deal.
Zune's media ecosystem will live on in Xbox, which is legitimately successful (mainly due to the Wii not being a "real" console and the PS3 being a semi-flop), and on Windows Phone 7, which will have paid-for marketshare via the Nokia deal.
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