Reuters heard from their sources that Microsoft will launch a digital music and video player by Christmas.
The company is also said to be planning to have a wireless feature on the new player to enable the downloading of music and videos over-the-air by users, according to one source.
Microsoft has been touting the new player to record companies in the last few weeks as well as a new integrated media software application developing a system akin to Apple's iPod/iTunes integrated ecosystem.
"They're proposing an iTunes model approach, another source told Reuters. "They're now interested in controlling the whole vertical stack of technology from the device to the service to the software."