Zune is dead, Microsoft declared on Monday, and in its stead, the software giant will offer the Xbox Music, which owners of the hardcore gaming console will start enjoying Tuesday this week.

The new online music service will be fully deployed as part of the Windows 8 launch on Oct 26, with Microsoft assuring that its fresh mobile computing thrust will definitely permeate into the slowly building up Windows ecosystem.

It is understood that U.S. customers will initially try out the new Microsoft offering, which represents the tech firm's new jab at challenging the dominance of Apple and Amazon's online music retail service.

Microsoft had earlier attempted to gain some inroads in the now lucrative digital music busines,s but Zune was largely a monumental flop, derided by critics as long-dead prior to the declaration of its official demise.

The new Microsoft virtual music store initially comes with around 30 millions songs that are ready for download, with an additional library of 70,000 music videos that will be made available only to Xbox console owners, Reuters said.

In time, global users will be allowed to access Microsoft's vast music library "for free as long as they put up with an audio ad every 15 minutes," The Associated Press (AP) reported Monday.

Downloading for offline playback will not be allowed for the free accounts but for users who will avail of Xbox Music premium accounts, unlimited and ad-free music streaming service await them, Microsoft said.

Such account will cost $US10 per month, media reports said.

The Xbox service redesign, Xbox Music General Manager Jerry Johnson said, is but part of Microsoft's path-breaking measures to repackage its game console offering into a full family entertainment product.

Rivals like Nintendo and Sony have earlier reconfigured the Wii and PlayStation consoles to become equipped with all-embracing amusement packages that include music, movie and social media attractions apart from their core business of delivering gaming pleasures.

It is inevitable that Microsoft will follow suit, Mr Johnson conceded.

"We also realize, as an entertainment company, that music is an important ingredient on its own and as a part of different user experiences," the Xbox Music chief told Reuters on Monday.

Microsoft aims to gradually deliver the new service to 22 countries by early 2013, around the same time that Windows 8 and the mobile devices it powers have been fully deployed.