What happened was that Microsoft completely failed to market it properly. The device was small, clean and had audio that was simply amazing. To make matters better Microsoft was offering a music service that gave you unlimited access to music for $14.95 per month! How could they possibly lose? Well like we said Microsoft failed to market this device properly.

Now fast-forward a few years and we find that Microsoft is no longer going to make the ZuneHD and also will no longer work on new models. They claim (at the time) that they will continue to maintain the Zune Music Service (which we still find cleaner and better than iTunes for music and video).

Yesterday all of that changed as we hear that Microsoft could be planning a new music service that will span the Xbox, Windows 8 and Windows phone. We heard rumblings of this when Microsoft had their Build conference and talked up the unified platform for Windows 8. We also found the new “music” app on Windows 8 to be very different from the Zune service (and logging in with our account did not bring our Zune music over).

So while this is not unexpected, we have our concerns and doubts that Microsoft is capable of doing the right thing in this market. They have more than a few years of failure in the phone and mobile media player market to work from so we do know that they should know what does not work. Still we cannot help but notice that many carriers (and customers) are considering Windows Phones, not for their features and advantages, but to keep Google and Apple from getting a strangle hold on the industry. Although the marketing phrase “because we are not Apple or Google” does have a ring to it we do not feel that it will garner much market share.

Microsoft has not commented on the rumors of a new and combined service, but with everything else you can bet that this will happen and sooner rather than later. We just hope that the trend we are seeing of forcing the use of LiveID accounts on Windows 8 will stop or Microsoft might find themselves fighting to get both the new music service and the OS that it is intended for off the ground. I suppose we will know when the June preview roles around… or at least we will have a better idea of the direction that Microsoft will be taking their music service and Windows 8. For now we just hope that Microsoft can avoid… well Microsoft in both the direction and the marketing of both of these items.

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