Microsoft developing Zune HD device

In its latest attempt to compete against Apple's stranglehold on the MP3 player market, Microsoft is reportedly set to release its third-generation Zune model sometime this fall.

Popular site Engadget recently received images and artwork that Microsoft later confirmed is the latest Zune, which is now in development. 

The HD-resolution touchscreen device is a little bit smaller than the Apple iPod Touch device, but the artwork for the Zune HD looks impressive.  The ability to have a high-definition touchscreen device, especially when Microsoft announced video games will be ported to the device, shows Microsoft's latest efforts to keep its sole MP3 player relevant.

Microsoft has been one step behind Apple every step of the way, but it looks like there has been quite a consumer buzz regarding the possibility of an HD Zune.

Even though the Zune hasn't been able to put a dent in Apple's MP3 market control, the Redmond-based company has been pleased with its success.  When company officials spoke with CDFreaks last year, the company said the Zune success has been good, but they still aren't satisfied yet.  Despite that, the economy soured and the Zune's performance also dropped $100 million when compared to the previous quarter that ended in 2008.

The Zune still holds the No. 2 position in the HDD-based MP3 player market, and has seen solid sales numbers in the flash sector as well. 

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