Makes sense. They had too many brandnames that didn't synergize between each other and that no one using one service knew about the other one.
Windows OSs, Xbox for games, Zune for Music (and some Movies?), then there was the Zune media player next to the Windows media player (both of which did some things better than the other but without one being good because they didn't both get the same good features, .e.g dynamic library on Zune but ******** library on WMP etc..) and the Windows Phone with Zune branding for its music App and Xbox for the games... all too confusing and no one really had/used it all, all three on every device.
Now they only have Windows for the OSes and Xbox for all things Entertainment.