The end of Zune? It's not just the music anymore

Is this the beginning of the end for the Microsoft Zune? In a story about Microsoft's quest to beat Google, the Financial Times writes that Steve Ballmer seems "all but ready to throw in the towel on the Zune," which hasn't come close to being an iPod killer. The piece hints that Ballmer is more interested in the music player business from an angle that Microsoft knows well - software.

As products like the iPod Touch and iPhone hit the scene - as well as the Blackberry Storm and other smartphones with media playback capabilities - it appears that the push is toward general purpose devices that can not only play music but can also run apps over a WiFi or 3G connection. Like making phone calls, playing music becomes simply one element of a device - not its sole purpose. That's not to say that anyone should expect a Zune phone anytime soon. Ballmer tells the FT: "You should not anticipate that" but adds that the company will stick to its strategy of developing software for a range of mobile devices.

Also see: Mary Jo Foley: Microsoft to wait until February for Win Mobile show-and-tell

Are partners willing to stick by Microsoft in this space? After all, weren't partnerships the core of that short-lived "Plays for Sure" initiative, the one that's become "Certified for Windows Vista."

Some argue that partners like MTV pulled the plug on Urge because Microsoft abandoned Plays For Sure. Regardless, in this climate of consumer spending, Microsoft is probably better off cutting its losses on the Zune and shifting its focus to areas where it can have an impact - software and online services.

It reminds me a bit of what happened with Creative and its Zen player. No, Creative didn't abandon its line of music players. But it also recognized there was an opportunity to offer what it does best - high-quality sound systems - and tie into the iPod. Today, Creative still has music players in its lineup but it also has iPod speaker systems. Just this week at CES, Creative continued the "if you can't beat 'em, join 'em" push by introducing SoundBlaster for iTunes.

That's not to say that someone out there still can't unseat the mighty iPod. But it just might be Apple that does it first - by launching new variations of the iPod Touch instead of the iPod Nano. Remember: DRM on iTunes is soon to be a thing of the past; variable pricing is the future of iTunes; and downloadable apps are where the real growth is. It seems that Apple has a jump start here and others - RIM's Blackberry, Google's Android and now Palm's Pre - are right behind.

Has the track become too crowded for Microsoft to gain any ground in this race?