Microsoft will make no new versions of the portable Zune player because of "tepid demand" - effectively conceding defeat to Apple's all-conquering iPod.
A report on Bloomberg claims Microsoft will instead focus on Zune software for Windows Phone 7 devices and, presumably, Xbox 360.
Microsoft wouldn't confirm the report, telling Bloomberg "we have nothing to announce about another Zune device".
Zune hardware plays songs and films and apps, much like an iPod.
Zune software streams films and songs to paying customers. There's the option to subscribe each month for unlimited steaming music.
In November 2006, Microsoft big boss Steve Ballmer predicted Zune could overthrow Apple's iPod empire. "We can beat them," he said, "but it's not going to be easy."
I bet he wishes he hadn't.