What did Microsoft intend with the "Zune"?

The Zune is a portable music player that Microsoft released for this holiday season. Early on it was rumored to be an "iPod Killer," and rumors abounded about exciting features it would have (and in fact, does NOT have) to draw people away from the iPod. The Zune currently holds 1.8% of the portable audio player market, and Microsoft's official pronouncements about it have been very low key: They are happy to be in this market, it's a good start, etc.

Now there have been devastating critiques of the Zune, but I'm not going to add to them. I just want to make one point that, I think, no other critic has mentioned. If you visit stores that sell audio players, like Circuit City or Staples, you'll find that the Zune has terrific shelf space. These stores probably pushed eight or ten other products out of the way to feature the Zune so much. Either these stores really believed the Zune would take off (because Microsoft persuaded them of that), or Microsoft paid through the nose for all that precious shelf space. Either way, the amount of shelf space suggests that Microsoft intended the Zune to be an iPod killer. And it's only now that it has a tiny niche in the marketplace, that MSC is carefully characterizing it as a minor product.