If Microsoft has one serious problem it is dabbling in a wide variety of areas without actually committing deeply to a project. Windows Mobile was just such a project, a low revenue project in which Microsoft dabbled and only became serious about when the iPhone took off.
One other such project is Microsoft Reader, an e-reader service that was much ahead of its time, offering niceties such as cleartype font rendering and annotation, but suffering from poor support and poor selection of content. It took a company that was serious about books like Amazon to bring ereading to the main stream.
As if to underline this failure Microsoft has announced the end of their eReader project. No new content will be made available by November 8 2011and the service will shutter August 30, 2012.
DRM will still however function.
It is not known if Microsoft will be looking at a new product for Windows Phone 7 and Windows 8, but is seems unlikely as extending their current (in some ways excellent) product would have made a lot more sense.
It was, in the end, an opportunity missed.