An article on Inside Mobile Apps is reporting a source is claiming that the virtual currency system will be discontinued by the end of 2012. This will affect developers and users of Xbox Live, Windows Phone, and the Zune Marketplace.

It will be replaced by transactions that will use real money and based on each regions currency for all Windows Phone content. This will bring the mobile platform in line with rivals such as the Android Market and the App Store.

When Microsoft were asked about the rumors the company refused to comment, and stated they never do on rumors or speculation. Mobile developers that have agreements with the company have been warned to plan ahead for their upcoming DLC and in-app purchase with the change in mind.

After the changes takes place users with existing Microsoft Points left over will see them changed into their local currency. The points are also used to purchase media content and games via Xbox Live, PC and Windows Phone, and the Zune Marketplace but this system is not used universally.

With Xbox Live the prices for the full games are listed in dollars, but users purchase DLC content with Microsoft Points. Meanwhile on Windows Phone applications are also priced in a similar way, but users can make in-app purchases with the Points. Users can also use the Points to purchase accessories for their Xbox Live avatars, and these points can also be purchased direct from the handset.

This move may surprise some users but the company has been slowly bringing in cash purchases to Xbox Live, which is where the most points are used. With a cash based system it will bring it into line with rival platforms, and the points to cash conversion can be confusing for some users, and often leads them to purchase points they don’t need.

Would you prefer a cash based system?

Microsoft are yet to officially confirm the news, but after Bloomberg wrote their piece on it, pretty much every tech website and blog has has their say on it already. There’s obviously a lot of speculation going around that Apple’s iPod is the sole reason that the Zune Player has met it’s untimely death, while we’ve also read some user feedback stating that Zune isn’t dead – it’s just been transformed into Windows Phone 7.

One thing we can all agree on though, is that sales and popularity of the device aren’t as high as Microsoft had hoped, and if thats the case, then why continue to waste money on hardware that is going to end up costing more money than making a profit. According to the LATimes, the Zune HD player wasn’t even ranked in the top five portable music and video players, with the iPod enjoying 77% of all sales in 2010.

If the news turns out to be true and the Zune HD does appear to be the last Zune player that Microsoft bring out, what are your thoughts on this? Where do you think Zune went wrong? Is it an evident message that the iPod simply can’t be beaten, or do you think there are other areas in which Microsoft failed. Give us your thoughts on this.

Apple’s iPod variants dominate the music-player market accounting for 77% of unit sales last year, Microsoft’s Zune players didn’t even reach the top 5, however the Zune software still has a strong future on your Xbox 360s, PCs and smartphones.

Recently a Microsoft representative failed to confirm that the Zune music and video players were being axed, however did release this statement: “We are thrilled by the consumer excitement for Zune across many new platforms, including Windows Phone 7 and Xbox 360. Our long-term strategy focuses on the strength of the entire Zune ecosystem across Microsoft platforms”, as you can see there is no mention of the Zune HD etc.

It is thought that existing Zune models will continue to be on sale, currently the top-end model is the 64GB Zune HD, however 32GB and 16GB variants are also available.

To be honest with you high-end smartphones running Windows Phone 7 pretty much rule out any need to buy the Zune HD, let’s face it any half decent smartphone you buy these days features multimedia capabilities which are comparable to the Zune HD.

Do you own a Zune player? Do you think they are underrated portable media players?

To get the update you must connect your phone to your PC and use the Zune software to check for the update, as for Mac users you must use the Windows Phone 7 Connector for Mac, if no update shows don’t worry as updates of this type are usually rolled out to a few thousand users at a time.

As previously mentioned the update is important for when new patches are rolled out, perhaps this means that Microsoft plan to roll out a more substantial update soon, perhaps this will consist of the copy and paste functionality which is currently missing from WP7.

Sadly this update will not be rolled out over-the-air, Microsoft say that this is for security and reliability reasons, which does make sense, I suppose at least when you update your phone via Zune you have the peace of mind knowing that a backup is made just-in-case.

Have you installed the update on your Windows Phone 7 smartphone? If so, was the process smooth and fast?

One thing is for sure, this is not your regular smartphone, but could very well be one of the most luxurious media-player based devices that you can currently buy.

The HTC Surround lives up to it’s name. It has Dolby Mobile and SRS Wow “virtual surround” audio processing, 16GB of internal memory, Zune integration and although it is a slider, there is no keyboard hiding behind that sexy exterior. Instead, what you get is a aluminium speaker with integrated kickstand so it can keep upright.

Of course, it looks like a HTC so any HTC fan looking for a media device should definitely give this a look. Although reports do suggest that no matter how much you want mobile speakers to deliver “surround sound,” it simply wont happen.

Overall, the HTC surround is a fine bit of hardware but if you are looking for more phone functionality, you are better to look at HTC’s other Windows Phone 7 options. But if media is your thing, don’t be mistaken and check this one out for yourself.

Source: Engadget

Obviously as these are early rumors do not take them too seriously just in case, however if these rumors turn out to be true the Zune HD2 will run a modified version of Windows Phone 7, this will mean that apps designed for Windows Phone 7 handsets should work on the Zune HD2.

If this turns out to be true it would seem as if Microsoft have ‘borrowed’ the idea from Apple, as Apple’s iPod Touch runs iPhone OS, therefore can run iPhone apps.

As we hear more rumors surrounding the Zune HD2 we will keep you posted, for more details check out SlipperyBrick.

It’s been denied many times in the past, but this latest software has started the debate about a “Zune Phone” all over again. The new drivers that are apparently in this update may be used for Zune integration for Windows Mobile.

After looking into today’s Zune software update (v4.2.202.0), Mobility Site feel that the secret “Zune Phone” is “pretty much confirmed”. Have a read of their blog post, and let us know if you would agree. You can see the lines of code from the .INF file via the above link, which looks very convincing.

Some readers may feel that this Zune update was timed just right, right before Mobile World Congress 2010.