Microsoft declined to comment on the future of the Zune players, but in a statement to Bloomberg noted that it remains "committed to supporting our devices in North America."
Zune launched in November 2006 to much fanfare and hopes that it could beat Apple's iPod. But sales never came close to reaching the levels of Apple's best-selling and market changing music and media player.
In 2009, Microsoft decided to separate the Zune team into software and hardware divisions, and attempted to get developers to target the platform. It hasn't really worked. Zune Marketplace support for the Xbox 360 aside, the Zune brand still has limited appeal outside of North America.
According to Bloomberg, Microsoft will continue to put its Zune features into Windows Phone 7 and in the Zune desktop software for Windows. Microsoft's Zune Pass remains an economical way to stream and have access to a large array of music, but the fact that it only runs on Windows devices ruins its potential as a true iTunes competitor.
The Zune was never a bad MP3 player. The failure was that the product never managed to differentiate itself as being better or cheaper than the iPod. If anything, the Windows-only requirement made the device more limited.
For that reason, we don't imagine many users will shed any tears over Zune's passing.