Microsoft has denied that it is about to kill off the Zune. The blogsphere was all a flutter with the rumour after the Financial Times claimed that Microsoft CEO Steve Ballmer "seemed all but ready to throw in the towel on the Zune mobile device."

However Microsoft's Zune team said in its blog that the gizmo is not going to die but be expanded. "We've been saying for some time that our strategy for Zune is to provide a great entertainment experience across multiple screens and devices. Software and services have always been at the core of this strategy -- this is nothing new.

Today, this means a great Zune experience on the PC and portable Zune devices, and as we have said before we think it makes sense to extend that experience to other devices in the future."

Entertainment and Devices President Robbie Bach said that the stand alone MP3 market was dead in the water  but he also said he did not think the device would go away, at least in the short term.

He said that there were some great assets on the Zune and there were lots of opportunities for those beyond what we do on the device itself. But Bach would not confirm if the Zune had a shelf life beyond five years.