Microsoft this week made official what many Redmond watchers long suspected--the company has quietly decided to discontinue its Zune line of MP3 music players and will stop selling the devices once current inventory runs out.

"We will no longer be producing Zune players," Microsoft officials said, noting that the company's efforts in digital music would now be focused exclusively on the Windows Phone line of smartphones.

Microsoft said it would continue to provide support for current Zune owners, and that orders recently placed for a Zune through the Zune Originals site would be fulfilled. Microsoft also, for now at least, continues to operate the Zune Music Pass service, which gives subscribers access to a full catalog of digital music for $9.99 per month.

The Music Pass service works on Windows Phone, as well as Zune.

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While Zune's demise is not unexpected--the brand, launched in 2006, never managed to break out of single digits in terms of market share--the fact that its official burial comes the same week Apple introduced its next-generation iPhone is more than just ironic. To many, it's proof of Microsoft's inability to move beyond the PC at a time when computing and content consumption are going mobile and competitors are cashing in.

Beyond Zune, Microsoft also killed off its Kin line of feature phones last year after just a few months on the market. "Microsoft should never be in hardware," said Rob Enderle, principal consultant at Enderle Group. "They've shown time and again that they can't be Apple, so they should just try to be a better Microsoft" by sticking to software, said Enderle.

The demise of Zune and Kin could be a problem as Microsoft tries, yet again, to make an impact in mobile computing--this time with Windows Phone 7. If consumers and businesses become convinced that the company isn't in the mobile game to stay, they may be unlikely to commit to Windows Phone as a platform.

Hoping to generate some goodwill, Microsoft said it won't leave Zune users high and dry. "Your device will continue to work with Zune services just as it does today. And we will continue to honor the warranties of all devices for both current owners and those who buy our very last devices," the company said.

Even Windows Phone users won't be entirely free of Zune just yet. They'll need the Zune PC client software to upgrade their phones to Windows Phone 7.5 Mango, meaning the Zune brand should live on as software, at least for the foreseeable future.

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