Thanks for the information, NSILMIKE!
The information you've provided has been helpful. My apologies for taking a while to respond.
It would seemed to me that Ballmer must not have been really informed. If I'm interpreting what he's saying as far as focussing on the three volume apps (phones, TVs, and PCs), I'm curious as to why the mentioning of MP3 players, such as the Zune, was left out. If that's the case, then it left one to opine that there may be a "Zune Phone" somewhere down the line. And, I would speculate that since HTC and MS has a good relationship, as I mentioned before, it won't be a bad idea for MS to buy out HTC.
The reason why I mentioned all this in the third paragraph is that if Ballmer anticipates that the Zune HD can't maintain its footing in this market, then we could see the death of Zune and possibly migrating over to Rhapsody? This is what I'm interpreting from Ballmer.
WinMo would have to be integrated with Zune software and probably it won't be a bad idea for MS to completely revamp WinMo (now Windows Phone) from ground up to mesh with the Zune software.
I believe the MS saving grace will be the full integration of Zune software with the Xbox 360 (TBA) since there are millions of Xbox owners out there. I don't know that impact this will have, but I would imagine that the subcription base will experience a spike and this will provide Zune a one-up over Apple's iTunes. If this happens, then the sale figures for Zune hardware will be relatively mute or insignificant.
I think MS should be raising the bar with the Zune HD better than it has done. But I guess its a long waiting game.
P.S. Since I'll be in Seattle in a few months, I may just stop by Zune's HQ and chat face-to-face with their heads.
You humans are quite a fascinating species...