Not really. It's dying. There have been conflicting reports coming even from official Microsoft sources so it's hard to say which it really is at the moment. It's pretty much certain that it will die in the near future, but the operative dead probably hasn't happened yet. And in the end, that only applies to continued devices and maybe support and apps. At the very worst you still have a stellar music player that will last you years. Nothing to be sad about.
I think the HD could've made a profit. I think the only reason it didn't go big was because or marketing. Almost everyone I know didn't know what a zune was
That's always been Microsoft's problem with the Zune brand. The time they had the highest momentum was during their 2nd Gen, and what a coincidence, they really put effort into advertising the devices that year!
The lack of marketing for the Zune HD was baffling. It's as if they thought that since they were Microsoft everyone would know what a Zune is and why it is great. I don't understand and probably never will understand their decision to not market the Zune HD.