Microsoft have now confirmed the suspicions of many; no more Zune devices will be produced by the company.
While Microsoft will no longer be making 'Zune devices', the Zune software and marketplace appear to be here for good in Windows Phone 7. Microsoft's mobiles include the player and marketplace of Zune and rely on it to provide users with a location to purchase media and applications. It is possible that Microsoft will re-brand the product as a media store rather than a complete media solution, but with such extensive features, such as the Zune Pass, I do not think this is likely.
Microsoft released the news on the 3rd of October, one day before Apple's long-awaited'Let's Talk iPhone' event. A Microsoft post explained;
We will no longer be producing Zune players. So what does this mean for our current Zune users? Absolutely nothing. Your device will continue to work with Zune services just as it does today. And we will continue to honour the warranties of all devices for both current owners and those who buy our very last devices.
Perhaps the timing of this announcement could be seen as the story of Zune: it was always behind Apple's iPods and other devices and often outdone by the company - I am sure Microsoft would disagree.