Microsoft has confirmed rumors that they will soon release a
music player under the brand "Zune".
You can bet that Microsoft's player(s) will play music and video locked into their WMA DRM schemes, and not be compatible with the iTunes Music Store. However, there are strong indications that there will be some kind of Xbox tie-in. No word yet on whether the new device will be a gaming unit though.
FreeiPodGuy expects that Microsoft will be very successful at marginalizing all non-iPod music players, but not very successful at convincing iPod users to switch. As the market matures, however, there will be new generations of users who will make initial choices about which platform they will go with, and that segment is where Apple's market share will take a hit.
That will undoubtedly result in better iPods for lower prices.
Go Microsoft!(Did I just say that?!)