Zune Hardware to End, But Software May Continue
The original source of the information was Dina Bass, Bloomberg News Tech Reporter. In two Tweets, she said first that Microsoft would eschew any further hardware development on Zunes, but also that Microsoft would take the Zune software and on the Zune software that's used on Windows Phones, Xbox and other devices.
Zune was to be Microsoft's answer to the iPod. However, it never took off, despite some respect for its software performance. The ecosystem around iPod, iTunes and later, the App Store, was too much for Microsoft to overcome after it allowed Apple its huge lead.
Farewell (soon?), Zune.