Toshiba to Manufacture Microsoft's Zune Portable Media Player

Microsoft Corp. (MSFT) said on Friday that Japanese electronics maker Toshiba Corp will manufacture its upcoming "Zune" portable media player, the software giant's answer to Apple Computer Inc.'s (AAPL) market-leading iPod.

A company spokeswoman confirmed that a filing made by Toshiba for a portable audio player to the Federal Communications Commission is for Zune, due out later this year.

The filing reveals that the device will come with a 3-inch liquid crystal display screen and a 30-gigabyte hard-disk drive and have wireless connectivity.

Microsoft would not disclose any more details, but said more information was coming in the "next couple of weeks." Toshiba was not immediately available for comment.

The world's largest software maker faces an uphill climb in closing the gap with Apple's iPod media player and iTunes Music Store, the runaway leaders in their respective areas.

The iPod holds more than half of the digital media player market, according to research company NPD, while iTunes accounts for over 70 percent of U.S. digital music sales.

In the United States, the iPod has more than 75 percent of the digital music player market, according to NPD.

"It's not like Microsoft was going to go out and build this itself," said Michael Gartenberg, analyst at Jupiter. "This is very good news for Toshiba."

In the user's manual section of the filing, Toshiba refers to the device as "Pyxis" and explains how users can send and receive photos, songs and albums with nearby users with a wireless connection.

The Pyxis also features a "DJ" function that allows a user to stream music to up to four other Pyxis devices. It also comes with a FM radio tuner.

Microsoft has not disclosed any pricing details about its media player, but Toshiba sells its own 30-GB hard-disk player called the Gigabeat, which comes with a smaller screen and without wireless connectivity, for a list price of $350.

Microsoft shares closed up 11 cents at $25.85 on the Nasdaq while Toshiba shares finished off 0.9 percent at 775 yen in Friday Tokyo Stock Exchange trade.