Nor should it; this is basically an admission that Baker & Taylor doesn't have the muscle to put forward and promote a proprietary format in the library ebook market. Epub support is simply too important to too many ereader owners.
Axis 360 was launched last fall as a competitor to OverDrive. It was originally based on the Blio format, which Baker & Taylor launched late in late 2010. Blio was pitched at the time as an accessible, feature rich format which offered fixed layout, improved image support, and embedded audio and video.
Many of those features have since been incorporated into competing ebookstores like iBooks, Kindle, and Nook, leaving Blio with little to set it apart, and what few features that still make Blio unique will soon be doable in Epub3. And now it seems that B&T is realizing how little Blio really offers readers, because today they have unlocked the walls to their garden and started letting ereader owners in.
If anything, the lack of device support has been dogging Blio and Axis 360 from the very beginning. The format could have survived the numerous engineering delays, but when B&T launched a proprietary format which could not be read on the millions of existing ebook readers they kinda shot themselves in the collective foot. The Windows, Android, and iOS apps simply weren't enough.
Amazon, Apple, and B&N each managed to build their own walled garden but the first thing they did was to make sure they had devices to ship. eReader owners are still the leading demographic for ebook buyers, and without them you don't have much of a market.