Microsoft is working on a new Zune code-named “Zune HD.”  However it may have a hard time competing against the iPod and iPhone because it looks like it may not have features that immediately distinguishes itself from the rest of the other digital music devices.  The known specifications include:

- 3.6″ OLED full touchscreen
- NVIDIA Tegra powered
- 4GB, 8GB, 16GB and 32GB versions
- HDMI Connection to stream straight to your TV
- HD Radio
- Web browser
- Wi-Fi compatible, with wireless marketplace
- Home AV packs, Car packs, Charge packs

These specifications have been confirmed by Neowin.