Dead true.... if XBOX music interface with WP8 devices doesn't improve I will buy myself a nice, used Zune player and enjoy the living crud out of it when I finally decide to jump to WP8, most likely early next year. Now, I do expect it to improve as proof by the GDR2 update addressing some of the bugs. But I already have the Zune software, so a used Zune player would be a fine, fine purchase if it doesn't.
But, do I think a dedicated Zune-style device could be profitable in this day and age of cell phones being the new MP3 players? Well, as I look at the landscape of MS, let us draw an analogy. Mobile devices have all but ate up the gaming industry. The XBOX only sells about 9 million a year. That is small, small french fries when you compare that WP sells well over that in a QUARTER, and it is called underperforming. But it leads to so many other money streams, it is very profitable. So, if a Zune style player (matched with XBOX Music and Media through the cloud, of course) could sell 4-5 million a year,and could be produced cheaply, why the heck not? That is just 4-5 million more music subscriptions and media buys. I can see that paying for itself fairly easily. I am sure the iPod is still profitable for Apple, but that it's actually sales are paltry compared to iPhones and iPads.