The reason behind the cancellation is the increased competition in the gaming peripheral market. Until a couple of years ago there were only a handful of major players but these days the market is getting crowded due to the addition of SteelSeries, Tt eSPORTS, Cooler Master, ROCCAT, and various others.
Microsoft has discontinued its range of SideWinder gaming products, for a second time. The first time was back in 2003, although the company re-launched its gaming brand in 2007 after some co-operation with Razer, although this time around it's not likely that we'll see a return of the SideWinder brand.