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Microsoft's Zune HD to Take On iPod Touch

Microsoft Zune HD
The Zune HD. Click to enlarge.
Source: Microsoft.
The rumors have been flying among portable music player aficionados and other gadgeteers for weeks, but now it's official. Microsoft (NASDAQ: MSFT) this fall will roll out a new Zune music player aimed squarely at Apple's iPod Touch.

"Available in the U.S. this fall, Zune HD is the first portable media player that combines a built-in HD Radio receiver, high-definition (HD) video output capabilities, organic light-emitting diode (OLED) touchscreen, Wi-Fi and an Internet browser," Microsoft said in a statement.

The latest addition to Microsoft's music player line, Zune HD will debut next week at the annual E3 conference in Los Angeles, Microsoft said.

Conjecture regarding the Zune HD has been rampant for weeks, and the feature set leaked out in April.

If nothing else, at least for now, the announcement puts to bed industry speculation that the software giant will soon abandon its roughly three-year-old foray into the portable music device market.

It also may reinforce other rumors that the firm may be on the verge of introducing its own Apple (NASDAQ: AAPL) iPhone competitor, since the iPod Touch and iPhone share similar designs and software. And with its multi-touchscreen interface and the ability to get e-mails and surf the Web with the device via Wi-Fi, the Zune HD seems to pick up a lot of the attributes of the iPod Touch.

The next step up for an Apple customer would be an iPhone, which adds mobile handset features. But for Microsoft, it's unclear what its next steps might be.

Microsoft officials have said they do not plan to build a Zune phone, even though the company also has a huge cash and time investment in its Windows Mobile operating system for mobile phones.

Yet the Zune is marketed under the Microsoft brand so, to many observers, a Zune phone seems like a logical move -- versus purely licensing the software to handset makers.

As part of the marketing initiative around the Zune HD, Microsoft announced it will also provide ties between Zune and its 17 million Xbox Live subscribers.

"Zune will be a premium partner in the Xbox Live Video Marketplace, bringing an exciting catalog of TV and film to the platform," Microsoft's statement said. "Zune will occupy the first slot within the Xbox user interface in the Xbox Live Video Marketplace, exposing the Zune brand experience to millions of new consumers for the first time."