Microsoft plans to challenge Apple's iPod with its own wireless digital music and video player, intending for it to be flying off the shelves by the yearend holiday season, reports Reuters. The Microsoft device will apparently be able to download content wirelessly (unlike the iPod), and the company is developing an application akin to Apple's iTunes. Microsoft is also in talks with music labels and is planning a huge marketing push, according to the article.

"They're proposing an iTunes model approach" for the unnamed digital media player/software project, a source told Reuters. "They're now interested in controlling the whole vertical stack of technology from the device to the service to the software."

Robbie Bach, recently appointed president of Microsoft's entertainment and devices division, is reportedly working with J. Allard, vice-president of the Xbox team, on the project.