James Lewin over at Podcasting News commented on a Marketwatch report today that indicated the Zune could be ending towards it’s end of life cycle soon.

Microsoft’s weak quarterly earnings report is pushing some to call on the company to abandon its once-hyped “iPod-killer”, the Zune.

According to a Marketwatch story, investors think it’s time to dump the Zune and focus their attention on competing with Apple’s iPhone:

“The market reception for Zune is so disappointing that many retailers have even stopped selling it altogether,” said George Kurian, a vice president at Tradition Capital Management LLC, which owns Microsoft shares.

Kurian said Apple has successfully outflanked Microsoft by shifting its iPod users to higher-margin devices like the iPhone.

“Microsoft should abandon Zune and follow Apple’s strategy to try to make its presence felt in the high-growth smartphone sector,” Kurian said.

The Zune had a lukewarm reception when it was introduced, because the device failed to significantly differentiate itself from both the iPod and other iPod competitors. Marketing blunders, like the PR fiasco of the Zunepocolypse and Microsoft’s inability to generate interest with teens, have caused Microsoft’s Zune revenue to plummet.

It’s unfortunate, I think, that the end may be inevitable for the Zune. The Zune has always tried to compete on the same level with the iPod, but even Apple’s own efforts to push the envelope (with the iPhone) have cannibalized that particular market.

Moreover, it’s trivially easy to comb through eBay for an hour or two and find places to buy iPod knockoff devices direct from Asia that sell for less than a dollar a unit.  With that sort of depreciated market, it’s hard to justify spending $100-$200 on an MP3 player.

As I’ve said before, I think the Zune gets mis-marketed, as I believe it’s almost more useful as a Roku-class device, as it seems to have a lot more functionality geared toward that end, due to it’s veg-factor compatibility and integrated marketplace (something it had way before Apple’s App Store):

Zune is one of the few devices to combine the following essential bits of tech to make podcast listening seamless and a genuine pleasure: integrated podcast directory, and the ability to define a continuous playlist out of subscribed podcasts.

As applied to the living room, this means two things:

First, it means that the ability to browse and discover new programming is built into the device.  It doesn’t need to be re-engineered or added on via a secondary computing device (like Apple’s AppleTV).

To be honest, though, I don’t see Microsoft making the transition for this product. They’ve made great strides with the Zune over the year, upgrading the marketplace experience, upgrading the device, and surviving the Zune Tattoo Guy, but they’ve done very little to change their marketing strategy.

I could be wrong – heck, I hope I’m wrong – but I wouldn’t stake money on it.