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TheStreet Open House

Microsoft Rolls Out Zune

Microsoft (MSFT - Get Report) has unveiled its answer to Apple's (AAPL - Get Report) popular iPod: a 30-gigabyte digital media player with a 3-inch screen.

The Zune will be on store shelves in time for the holiday shopping season and will come preloaded with a selection of music and videos, Microsoft said in a press release Thursday. The Zune will feature wireless technology and an FM tuner, and it will come in three colors: black, white and brown.

The Zune will be manufactured by Toshiba.

In contrast, Apple's 30-GB iPod has a 2.5-inch screen and doesn't come with either an FM tuner or a wireless antenna. Users can, however, buy an FM tuner add-on for the iPod. And the company offers customers the choice of some six other iPod models.

The details of the Zune were no surprise; Toshiba let the cat out of the bag last month in a filing with the Federal Communications Commission. Less clear, though, is the business model. Apple, which dominates the world of portable digital music, makes little or no money selling music on iTunes, but the iPod itself is very profitable.

Microsoft did not disclose a price for the new device, but said it will sell music and videos via the Zune Marketplace. Customers will have the option of downloading and paying for individual tracks or purchasing a subscription.

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