Absolute Gadget

We remember some time last year having a very revealing conversation with a source close to Microsoft. In the conversation, she was trying to gauge the media's interest in Zune and where it had gone wrong with the media player.

She couldn't say much but the tone of the conversation implied that Microsoft was gearing up for some kind of new hardware for the European market, especially the UK. Rumours since then have focused mainly on Zune being rolled into Windows Mobile (which would be the most logical). However, recent events suggest that a third generation Zune will debut this year with a brand new set of features aimed at killing off Apple's iPhone and Ipod Touch.

According to Windows Mobile fansite WMPoweruser.com the new device will be a multi-touch only interface and "support wireless sync". It said that the new player will be called ZuneHD and will also support 3D Xbox games (which would explain why Microsoft is hiring a new Halo developer).

Microsoft has been dropping hints about continuing with the differently successful Zune. Microsoft's Zune Group Manager, Brian Seitz, on Twitter that there would be "new zune hardware this year".

With Blackberry, Palm and Android in the smartphone marketplace, Microsoft desparately need to hit on a winning formula before its mobile devices become an irrelevance.

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