After probably just being a drain on resources, Microsoft has announced that they'll be discontinuing Xbox LIVE service on original version games and consoles - even Xbox v1 titles downloaded to Xbox 360.
Given that Microsoft is probably concerned with other major projects for the Xbox LIVE community that are turning out to be more successful (Netflix, Marketplace, Facebook, Live.FM, etc.), this doesn't really come as a surprise.
Since getting started seven years ago with some lofty dreams about bringing the world together, Xbox LIVE has done well by pulling in millions of users and got off the ground with the Halo franchise. But it's really time to move on and develop some more stuff for this online community service.
But what is interesting to note in their announcement is that "the best is yet to come for Xbox LIVE" with some news on Project Natal to come - hopefully soon.