Is Microsoft going the way of the Zune?

It's certainly an understandable comment by Ellison, but it's not reflective of Microsoft's goals. Remember, this is a company that thought it could dominate any market it entered, as long as it got the products right. It came to believe that there was little growth left for it in the business markets, and a decade or so ago started turning to what it believed remained a fast-growth area - consumer electronics. It's not clear whether they now believe they haven't gotten the products right yet, or whether it is a quagmire that they can't win, but either way they can't retreat and write off all of that investment.

But I wouldn't under any circumstances call Microsoft a consumer electronics company. It is a marketing company that concentrates on technology.

I disagree. I think MS is trying to focus on multiple markets at once because they have the resources to do that and they have real concerns about the future. They were taken largely unaware by the internet - and remember their response put them in the dock with not only our government but all of Europe. They are rightly concerned they can't see into the future and can't know what might come at them so they spend money, which they have in abundance, to make sure they're in those spaces.

As to the Zune, they've done a good job of learning from Apple - and let's be honest, it's much easier to take someone else's work and try to refine that - but I'm not sure even they believe the Zune really matters as a music player. I think they have the money* to spend on this small device because they don't know if that will generate a more existential threat or a bigger opportunity.

*MS is more constrained by talent of all kinds, from writers to managers, than by money. That issue, that it's hard to manage so many ventures well, may become their biggest problem.