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Microsoft's Zune music players.  Microsoft is upgrading its Zune line and testing a website where owners of the MP3 players can socialize as the technology giant strives to wrest market share from Apple's beloved iPods.

Microsoft is upgrading its Zune line and testing a website where owners of the MP3 players can socialize as the technology giant strives to wrest market share from Apple’s beloved iPods.

Apple’s iPods command more than 70 percent of the MP3 player market while Zune is a distant second with approximately 10 percent, according to industry statistics.

Zune models featuring touch-sensitive navigation buttons instead of track wheels, wireless synching to home computers and more ability to transmit music wirelessly between Zunes, will be in US stores next month, Microsoft said.

“Twenty years ago we bet the company on an integrated productivity suite of word processing, spreadsheets and presentations, and we changed the way people work,” Microsoft chairman Bill Gates said while unveiling new Zunes on Tuesday.

“Today, we’re making big bets on games, music, and video and connecting these entertainment experiences to help change the way people play.”

Microsoft has three new Zune models. A black Zune with 80 gigabytes of hard drive memory and a 3.2 inch screen is priced 250 dollars (US).

Colorful “ultra-portable” Zunes with flash memory are priced 150 dollars for a four gigabyte model and 200 dollars for eight gigabyte versions.

The devices are the first additions to the line since the original 30-gigabyte Zune debuted in November of last year with a price of 199 dollars.

“It’s a nice evolutionary development to the product line,” said Jupiter Research analyst Michael Gartenberg.

“The real challenge is winning the hearts and minds of consumers. The iPod has gone from being a music player to being a cultural icon. This is going to involve the cool factor and Microsoft isn’t known for being a cool company.”

Last month, Apple unveiled a slick touch-screen iPod as part of a bold product line overhaul aimed at boosting year-end holiday season sales.

Apple added video, memory or other coveted features while not pushing up prices.

IPod Touch models feature Apple’s Safari web browser and a built-in wireless antenna, meaning users can connect directly to the Internet at Wi-Fi “hot spots” the same way they might with a laptop computer.

Apple built custom Google and Yahoo search functions into iPod Touch models, along with YouTube video viewing and an iTune Wi-Fi Music Store that permits shopping at the online store without going through a computer.

Apple’s overhaul includes matchbook-size iPod Shuffles in new colors and iPod Nanos built with video and game capabilities.

The original iPod model is now the “Classic” and is available in 80 and 160 gigabyte models, enough memory capacity for users to take entire video or music collections with them daily.

While the refreshed Zune line is competitive, Apple holds the innovation lead with its improved iPods, especially the Touch which is essentially an iPhone without the telephone feature, analysts said.

“Microsoft caught up to where the iPod was six months ago,” said analyst Matt Rosoff of Directions on Microsoft.

“It is hard for me to see why people would choose a Zune over iPod. Microsoft will eventually have to take a huge leap to catch up to Apple and it’s not this generation.”

Zune could get traction from being the only MP3 player with its own tailored online music store and social-networking website, according to Rosoff.

Microsoft’s Zune Social website is in a beta testing stage and is to be launched publicly when new Zune models hit store shelves.

“This is what they should have done when they first launched Zune,” analyst Rob Enderle of Enderle Group said of the product line upgrades.

“It makes them competitive. If you are already hooked on iPod this probably isn’t going to pull you off. But if you are coming in fresh, Zune is a viable option.”

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