On Monday, Bloomberg News reported that the company will concentrate on migrating the Zune software to other mobile devices, notably Windows Phone 7 smartphones. The news service cited "a person familiar with the decision." Microsoft is expected to continue selling its remaining inventory.

'Committed To Supporting Our Devices'

Microsoft hasn't publicly announced a decision, and has told news media that it remains "committed to supporting our devices in North America." While there are no announcements about any new Zune devices, the company noted that it recently introduced the Zune HD to the Canadian market through the Zune Originals store.

It added that it was "thrilled by the consumer excitement for Zune across many new platforms, including Windows Phone 7 and Xbox 360," and said the long-term strategy was to focus "on the strength of the entire Zune ecosystem across Microsoft platforms."

The Zune software enables a user to buy music and videos and to subscribe to a monthly streaming service in addition to playing the files. The software is used on Phone 7 devices to play media, provide access to the Zune Marketplace, sync media, and accept updates.

The media player was first launched in 2006, at which time Microsoft CEO Steve Ballmer forecast that the Zune would eventually overtake the iPod, "but it's not going to be easy." As of 2009, Apple's iPod still had 77 percent of the market, and in 2010 the Zune wasn't among the top five players.

'Wouldn't Be Very Surprising'

Ross Rubin, director of Industry analysis for consumer technology at the NPD Group, said a decision to forego any new Zune models "wouldn't be very surprising." He said Microsoft launched the original Zune at a point that was "late in the game, when Apple already had a lot of momentum."

He noted that the Zune has "struggled" for market share, and, by abandoning the hardware, Microsoft has "an opportunity to continue bringing the platform to other devices," including the Xbox 360 and PCs, in addition to Windows Phone 7-based devices. One benefit of Zune software on phones, he said, is that billing can be carrier-based.

Rubin pointed out that the media-player category has been declining year after year, and Apple and Samsung, among others, have morphed their media players into what could be called "smartphones without the phone part," such as the iPod touch. Microsoft's decision to abandon the Zune hardware indicates it will focus on smartphones that are media players, but also phones.