Microsoft Chairman Bill Gates with KEXP's John Richards at the 2006 Zune launch in downtown Seattle.

Microsoft is finally pulling the plug on its dedicated Zune hardware but planing to keep the Zune music software running on Windows Phone and other devices, according to a source quoted this afternoon by Bloomberg News.

Microsoft is expected to continue selling the existing Zune devices but won’t create or sell new ones, according to the Bloomberg report.

The decision comes less than five years after Microsoft launched the device in competition with Apple’s iPod. The latest version of the hardware, the Zune HD, was well-received by fans. However, the company never gained the type of market share that would have made it a serious player in the market.

[Follow-up: Fond memories of Microsoft Zune ... in brown, of course]

With the release of Windows Phone 7 last year, the Zune highlighted a fracture in Microsoft’s development platform, as apps weren’t compatible between the two devices. Separately, the Zune music and video service is also available on Microsoft’s Xbox Live online service on the Xbox 360.

The Zune devices had more personality than the typical Microsoft product, including the sly “Hello from Seattle” message in the body of the device.

Business Insider has a summary of the Bloomberg report, which doesn’t yet appear to be available online. We’ve asked Microsoft for comment, and we’ll update this post depending on the response.

Update: Here’s the Bloomberg report.

Comments

  • Anon

    I would looove to buy a discontinued ZuneHD!

  • Anonymous

    I guess Gate’s and Baller’s kids will have to buy iPods now.

  • http://x.co/EGXP Domainers Gate

    1st … KIN

    2nd … Zune

    3rd … WM7

  • Bob

    Another failure for Ballmer to add to his already extensive collection.

    • Obelix

      I am sure they can have a Zune from the stock they can’t sell!

  • Anonymous

    Can’t win ‘em all.

  • http://www.atebymonsters.com Matt

    It’s really not just Microsoft that is losing the battle against Apple’s iPod … I’m a little surprised that nothing has even come close to nip at that market share.

    The Zune had potential I’ll give Microsoft that much … UI was unique and gave a new flavor.

    The software side of it I think will always continue. The social implementation of the Zune software is don’t right … Better than the attempt Apple did with Ping.

  • http://www.technokyle.com kyle

    I think they should make a device similar to iTouch… Zune and iTouch is like comparing apples to sextoys

  • Zizzish

    I love my Zune 80. It’s full and I would upgrade to the 120 if they hadn’t been canceled in favor of the HD models with too little space to suit my consumption habits. Great device. Horrible positioning and marketing. Why is MS’s consumer marketing always so ham fisted?

  • Lion6273

    This sucks cause I have a Zune HD and i totally love it…BOOO On you Microsoft

  • Hmm

    Big mistake – the iPod/iPhone attractiveness was if you were using the iPod touch, moving to the iPhone was a no brainer since people werent afraid to upgrade to a 2-year phone lock-in as they were already familiar with its interface.

    ZuneHD interface and WM7 are very close. A little more engineering on MS part would have created the same leap of faith for their users (upgrade path).

  • Robbie the Robot

    I have a Zune HD 64g. I love it! Before buying it, I spent a lot of time comparing it to other similar devices and decided it would be the best bang for my buck. I believe it is superior to any Ipod. The problem with Zune/Miscrosoft is that it has done NOTHING to compete head on with the Ipod. The customer support for Zune is awful; the support techs know very little about the device, because they’ve been given little training. Ditto for the Zune software you can download onto your computer. Because I wanted to maximize the many features of my Zune player and software, I figured out a lot of stuff on my own that the tech support people don’t know. I wish Microsfot would hire me as their Zune person. I’d give the Ipod a run for its money. Zune HD will take your breath away.

  • Chinacat120

    I am going to upgrade my 16 HD for a 32…
    I truly hate Itunes and Napster…this was so ez!!

  • Car4u_1

    The xbox HD player Zune what’s next win phones?

  • Gamera

    I’ve had a Zune for a couple years and I love the thing (81k plays). The Zune HD is incredible along with the Social membership (for unlimited music downloads). My wife has an iTouch. Anytime we go someplace we always use the Zune since we could download almost anything we want. I’m really disappointed in microsoft. The problem is NEVER ONCE did I see them market this product! No wonder it’s failing. If I need to continue music using a Windows phone, then I will. Ipod can’t come close to this as a music device.

  • “smilepanda” – zunetag

    I love my Zune HD! This device was based on NVDA’s gen 1 Tegra processor, MSFT was one of the few to launch a product based on the chip. Can’t wait to see what Mr. Softie come sup with based on Tegra 2, bet it will be great giventheir development experience on the platform, W8 tablet?

  • Marcelo

    It never arrived here in Brazil and it now are going to be discontinued. Poor device.

  • http://mansoor95.blogspot.com/ ibrahim mansour

    Hope is a state of mind, not of the world. Hope, in this deep and powerful sense, is not the same as joy that things are going well, or willingness to invest in enterprises that are obviously heading for success, but rather an ability to work for something because it is good.

  • Anonymous

    I own three (3) Zunes; a brown, a red and a platinum Zune HD. All still work perfectly. I still use the Zune HD daily as a small, easy-to-use music player. It sounds better than my iPhone and iPod Touch (almost as good as my Sony Walkman X-series).

    It is sad that MS couldn’t just market the Zune as a pure media player instead of trying to compete against the iPod Touch and its app capabilities. I would love to see a new media player that is basically a Windows Phone minus the phone. 

  • Anonymous

    I own three (3) Zunes; a brown, a red and a platinum Zune HD. All still work perfectly. I still use the Zune HD daily as a small, easy-to-use music player. It sounds better than my iPhone and iPod Touch (almost as good as my Sony Walkman X-series).

    It is sad that MS couldn’t just market the Zune as a pure media player instead of trying to compete against the iPod Touch and its app capabilities. I would love to see a new media player that is basically a Windows Phone minus the phone. 

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  • http://www.facebook.com/people/Mike-Conners/100003788802465 Mike Conners

    Well it’s over a year after this rumor was released, and guess what? the Zune is alive and well selling brand new on Amazon.com. Currently the Zune is in 2nd place at ~17% – Apple has slipped to ~64%.

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