Microsoft's answer to Apple's popular iPod family of players was first launched in mid-November 2006. The $249 player promised to change the way we socialize with portable audio devices while at the same time offering the Zune Marketplace which is Microsoft's equivalent to iTunes.

The original Zune came in three colors (white, black and brown) and featured a 30GB HDD, 4" color screen, built-in FM tuner and WiFi connectivity for "3-day-or-3-play" wireless music sharing. At launch, Microsoft also made available 100 limited edition hot pink Zunes which quickly made the rounds on eBay for insane prices. Recently, Microsoft added a fourth official color to the Zune family: pink.

While Apple is already celebrating 100 million iPods sold nearly six years into its initial launch, Microsoft has more sedate figures for its Zune. Microsoft expects to top the one million mark by next month and is right now holding on to roughly 2.4% of the MP3 player market compared to 73.7%, 9% and 3.3% for Apple, SanDisk and Creative respectively -- all of which have flash-based players in their lineups.

Microsoft may be falling behind in the portable media player market, but that isn't stopping the company from building a new manufacturing plant in China to produce its Zune. The plant will produce a second generation HDD-based Zune and the long-rumored flash-based Zune.

The second generation HDD-based Zune will be both smaller and lighter than the Toshiba-sourced first generation model. The new Zune will be new-from-the-ground-up with Microsoft playing a major role in the design. "There are definitely some cost efficiencies, but the more important thing from our perspective is the flexibility and control we have in creating a device from scratch and making it down to the last component what we want it to be," said Jason Reindorp, marketing director for the Zune.

Microsoft is also hard at work on a flash-based Zune to take on the iPod Nano. Flash-based players make up an overwhelming majority of Apple iPod sales, so Microsoft would be remiss not to follow suit. Microsoft will likely target the Nano as far as size and weight is concerned. Also expect maximum storage capacities of at least 8GB (as seen with current iPod Nanos). A 16GB model shouldn’t be ruled out considering fast-dropping NAND flash prices.