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Erik Huggers, head of Microsoft's Digital Music Division said that the company is working with a number of manufacturers, including Philips, Samsung and Creative to design and test players, in a hunt for the so-far elusive 'iPod killer'.

'Come this fall there is going to be a number of devices that get close to competing with Apple's iPod,'

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Huggers said. He added that the new products will compete on 'industrial design, usability, functionality and features'.

However, while its rivals play catch-up Apple continues to add more and more features, with video widely thought to be next on its list. Add to that the unique integration of the iPod with its iTunes software and iTunes Music Store.

In contrast, the plethora of players and music stores that rely on Microsoft's Windows Media technology are having problems when it comes to talking to each other, according to Jupiter analyst Michael Gartenbergm despite Microsoft's PlaysForSure guarantee.

'We tend to call it "PlaysForAlmostSure",' Gartenberg said. 'Meanwhile Apple's iPod and iTunes are dancing together like Fred Astaire and Ginger Rogers.'