My experience has actually been the opposite: with the notable exception of the launch 360s, Microsoft hardware has been well designed, fairly priced and long lived.

I'm still using the Microsoft natural keyboard and optical mouse I purchased in ... 2001? The sidewinder joysticks were always excellent. My original XBox is going strong; the Duke being perhaps the best designed and built gaming controller to date. The 360 controllers are similarly excellent (though I miss the Duke's size). The wireless notebook mouse I bought 2 years ago is the best wireless mouse I've used, period.

I can't speak to the Zune, having never owned one.

I assumed that with that track record, the accusation that "the 360's reliability problems were known but allowed to slide in blind pursuit of launching first" made the most sense. It was deeply disappointing, but I do give the hardware group itself the benefit of the doubt.