Zune leak reveals iPod nano killer?

Core details about the next generation of the Zune have been leaked, according to a blogger who claims to have spoken with a member of the Microsoft Zune team. The source has allegedly revealed that the company is already finishing the design stage of a smaller Zune based on flash memory whose size and features would be consciously aimed at defeating today's the iPod nano. The device would be just three inches tall and a quarter-inch thick with a screen that covers nearly 75 percent of the front face. It should also hold more flash memory than today's 8GB flash players, with beating Apple and other rivals in terms of storage as an explicit goal.

"You have to beat the competition, you know," the Microsoft employee said.

A sequel to the existing 30GB hard drive is also in the works, the report notes. The device will be near-identical on the surface, only becoming thinner despite an increase in storage -- but the core components may be very different, he hinted. The opening of a new Zune-specific factory was interpreted as a shift towards an in-house design, hoping to move away from the Toshiba Gigabeat-based components of today's model.

Release dates and other more tangible details of the player were unavailable during the alleged conversation. The blogger noted, however, that nearly 2.4 million of the updated Zunes will be made in the run-up to the holiday season, when both the new hard drive model and its flash sibling should be available in stores.

Microsoft's first self-produced music player has struggled in the market to date, achieving a sizeable but small portion of the market compared to Apple since its launch in November. The lack of flash-based models has been cited by numerous sources as a contributing factor in Microsoft's relatively poor showing.