it could be that MS wants to re-focus on its strength: desktop OS. This might be a sign that MS position its software to be the traffic directors to preferred 3rd-party partners who are the best-of-the-breed in their respective market. In Windows past, MS first releases OS w/o important applications/features, let 3rd-parties fill in the niche, then develops features that won market acceptance. A modified version of this strategy might be simply making deals w/ 3rd-party web-sites to monetize the traffic.

If this is the thinking behind closing MS Live Blogs, then, yes, it's a tactical retreat but actually a step forward in their strategy.

The more interesting question might be how much of Windows Mobile OS influences this decision.