Bryan Lee, the Microsoft executive most recently in charge of business development for the company’s Zune portable media player, is retiring to “pursue personal interests.” Taking over the business development work for the Zune brand will be J. Allard, the man widely credited with building Microsoft’s Xbox brand and Xbox Live services into a serious player in the video game console market.

Lee came to Microsoft in 2000, following a long stint at Sony Pictures Entertainment handling contract negotiations. Both Lee and Allard had hands in creating both the Xbox and the Zune, and Lee led most of the negotiations with studios, music distributors, and other content providers for licensing Zune content: including the now infamous dollar-per-player royalty being paid to Universal Music.

Microsoft says Lee’s retirement does not indicate any dissatisfaction with his management of the the Zune business, but it’s certain that J. Allard will face significant challenges trying to built the Zune brand. The initial Zune player has been widely criticized for its crippled Wi-Fi sharing capability and for abandoning the PlaysForSure compatibility standard Microsoft held out to music player partners wanting to use the company’s digital rights management technology. But, as with the Xbox, Microsoft says it’s taking a long-term view of the Zune, looking to establish and grow a family of devices and services which, over time, will eventually challenge Apple, the iPod, and iTunes for the digital media market. Although Microsoft certainly has the financial resources to produce Zune products and services for an indefinite period of time without success in the marketplace, shareholders and industry watchers may take a dim view of Microsoft pouring money into a project over the long term without at least some signs of momentum—so Allard may have his work cut out for him.