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The company has introduced three new models - one 80GB hard disk player, and two flash-based devices with capacities of 4 and 8GB. All three include a new feature that automatically synchronises the device over the home Wi-Fi connection, when the player is plugged-in to charge its battery.

Microsoft also aims to tap the social-networking phenomenon with Zune Social, a website for users to display music they like, share playlists and find friends with similar tastes.

The new devices, set to go on sale in the US mid-November, are equipped with a circular navigational pad that allows a user to both "flick" through options like on a touchscreen, or "click" through choices.

The 4 GB model will go on sale at $149, the 8 GB Zune will cost $199 and the 80 GB model will sell for $249. Those prices are the same as similar-sized iPods. There's still no word on a UK release, despite reports earlier this year that Zune would arrive in this country before Christmas.

The new Zunes are the second generation of Microsoft's answer to Apple iPod, which has sold more than 100 million units in various shapes and sizes since its 2001 launch.

By comparison, Microsoft joined the fray last year with a single 30 GB Zune model and has sold 1.2 million units.

No threat to Apple

Analysts said the next-generation Zunes are necessary to keep existing users happy, though the new devices are not enough to close the gap on Apple. "I don't see Microsoft gaining market share on Apple, but it may

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gain share against the other also-rans," says Van Baker, analyst at research firm Gartner.

Microsoft says it's too early to draw comparisons with Apple. "The market share thing is the easy thing to discuss and write about, but it's such a bad measure," claims J Allard, Microsoft's corporate vice president in charge of the Zune business. "Talk to me in six or seven years about market share. Talk to me this year about the experience we are creating."

The new Zune family

Microsoft's top brass plans to provide Zune with a three- to four-year window to gain the necessary scale and reach to become a legitimate rival to Apple. The company also says it doesn't expect Zune to post a profit in the short term. "We are very committed to this space. There is a lot we can do," says Bill Gates, Microsoft's co-founder and chairman.

Gates claims ceding an early lead to rivals and closing the gap over time is a recurring theme in his company's history, whether it was productivity software or PC operating systems. "We think the same kind of thing in terms of persistence and innovation can apply in this connected entertainment area," Gates says.

New Zunes will automatically import TV shows recorded to Microsoft's Windows Media Center, which is now built into most home versions of Vista. Zune Marketplace, a digital music store, only sells music videos and offers video podcasts free.

Microsoft said it would add more than 1 million MP3 songs free of digital rights management on to Marketplace, declining to identify music labels it planned to work with on that.

The company has completely redesigned the software that runs on the Zune, as well as the PC client software, to make it easier to navigate and search for new music. It also brought the player's design in-house, using contract manufacturer Flextronics International, which made the first Zune.