Despite the Zune’s inability to break Apple’s iPod dominance in the music (mostly) player market, I think this is a bad move. It means that Microsoft has no product in the large capacity music player category. Apple has a 160GB classic even though I would guess it only sells to a single digit percentage of their market. They also have a 64GB iPod touch in their product lineup. Microsoft’s largest capacity Zune HD model provided a respectable 64GB storage. Even the first generation Zune in pictured in the photo here next to Windows Phone HTC HD7 provided 30GB of storage. And even 30GB is considered small by people with large music collections. Windows Phone currently tops out at 16GB although some brave souls can attempt to install third party SD storage cards.
Catering to a small but important (and sometimes vocal) market segment in a larger ecosystem makes sense. It provides headroom for everyone else. This provides a vision and roadmap to the future as ever increase media storage demand drives devices to larger capacities. Windows Phone’s design has made adding storage difficult for most end users. Limiting users’ options is never a good thing and leads them to consider alternatives from competitors.