Microsoft hopes to turn it around with Zune HD

From CNET News.com: Microsoft will take another swipe at the iPod on Wednesday when it launches the latest version of the Zune media player.

After three years and untold millions spent on the line, Microsoft's hopes of cutting into iPod's big lead are now on the Zune HD, with its 3.3-inch multitouch screen, streaming-music feature, and the ability to playback video, with the help of an HDTV, in 720p. A 16GB Zune HD is available at retailers for $219.99 and a 32GB will cost $289.99.

But at this point in Zune's evolution there's plenty of skepticism that the Zune can close the gap on Apple. A Zune-iPod comparison has for too long resembled a late-round prize fight, the kind where the challenger is cut, swollen-eyed and wobbly legged but refuses to go to the canvas. Zune sales are falling, a top manager has moved on and what's perhaps most worrisome is that the category is becoming passe.

While Apple also tries to kick-start lackluster iPod sales--upgrading Nanos with such features as a video camera and voice recording--CEO Steve Jobs has steered consumer interest away from straight digital music players and into smartphones. Apple has sold more than 30 million iPhones over the past two years and seen more than 1.8 billion iPhone applications downloaded.

Nonetheless, this is still Microsoft, one of the biggest technology companies in the world and well known for its patience.

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