The real question is why was the Zune a failure. It was a failure because it didn't offer what the market was buying. The fact that the few who did buy the Zune liked it in no way confers any quality upon the Zune.
To rank my experience between portable music playback devices:
iPhone > Zune > iPod
She swears by her Zune, and having used both it and the iPod, the Zune is far and away a better device on every front. Having said that, the iPhone's interface is just that much better - and has the benefit of in-depth integration with third party devices.
When I'm listening to music on my computer though, I actually came to use the Zune desktop software. I have a rather silly process of downloading music, tagging it with MP3tag, dropping it into iTunes (to sync to the iPhone, & to organize the files into folders based on artist & album), and Zune Desktop picks up on the changes to my Music folder and catalogs them automatically.
Zune Desktop blows away iTunes for music playback. iTunes is perhaps a better music/app/video store, but the interface sucks, it's laggy. It looks out of place because it's using dated Mac aesthetics in a Windows environment. For a company that prides itself on style, it sure screws that pooch in the software department.
I feel the same way too. It's weird that for an application that could be a gateway to Apple-dom, Apple doesn't appear to spend much effort. I see it get updated on a regular basis, but I see very little improvements, just feature adds. It's gotten to the point where I don't bother updating unless it blocks me from updated my iPhone.
I suppose Apple thinks that spending those resources on other properties is a better investment, but as an end user that deals with iTunes it's a bit frustrating.
I saw it for the first time when my friend brought an windows phone 7 device. I was so fascinated by the Desktop zune, I didn't even properly played the phone itself(I saw it for the first time as well)
"the Zune is far and away a better device on every front"
followed by:
"the iPhone's interface is just that much better - and has the benefit of in-depth integration with third party devices."
Which is it?
Within that quote, I say that the Zune is better than the iPod, and the iPhone better than the Zune. I illustrated this very simply just two lines before that one. There is no contradiction at all. By asking which is it, you are intimating a dichotomy where a trichotomy was actually in play.
I'll restate more clearly, and in greater detail: For playing music from my library, I believe the Zune is a superior device when compared to the iPod, however having come to own an iPhone, I prefer the iPhone to the Zune - with respect to playing music from my library.