Microsoft is said to have abandoned plans to release any new Zune hardware. It will still work on the underlying media player, including versions running on Windows Phone 7 handsets.

The news comes from Bloomberg, quoting a “person familiar with the decision.” Microsoft hasn’t disputed the claims, simply noting that there is nothing to announce about a new device, but noting the company’s “long-term strategy focuses on the strength of the entire Zune ecosystem across Microsoft platforms.”

The Zune was a classic story of Microsoft being far too late to the party. The first Zune players came out in late 2006, by which time the iPod was already on its fifth generation. Facing a major marketing handicap, Microsoft struggled to come up with reasons why people should opt for the Zune over other portable media players. The result was sales that look to have been a few million, compared with something in the region of 300 million iPods to date.

The company also tried its own online music store, Zune Marketplace, which currently has a range almost as broad as iTunes. And it even tried manufacturing its own mobile phones with Zune built-in, a costly project that was abandoned after reported sales of less than 10,000 units. The technology does remain available as an app running on third-party phones running Windows Phone 7 though.

It’s telling that the most notable story about the Zune came on New Year’s Eve 2008 when 30GB models around the world crashed and then froze up. That turned out to be a 24 hour problem caused by the Zune not realizing that 2008 was a leap year and thus being confused when it found an “extra” day at the end of the year.

Of course, Microsoft is hardly alone in such matters: as iPhone users who rely on the handset’s alarm are becoming well aware, Apple seems to have trouble with the concept of Daylight Savings Time.