From the BBC:
Microsoft has confirmed it is developing a “Zune” portable music player which analysts believe will compete directly with Apple’s iPod.
The software firm said it was working on a number of music and entertainment hardware devices, the first of which could launch later this year.
Rumours of a rival to Apple’s hugely successful music player – dubbed “iPod killer” by some – have long circulated.
But experts said Microsoft would find it hard to compete with Apple.
More here.