June 19^th, 2006 (11:32am) - Today, Reuters informed that sources familiar with Microsoft’s plans revealed that the software giant is indeed developing a music and video player to compete with Apple’s iPod and creating its own music service to rival Apple’s iTunes.

Robbie Bach, a rising star at Microsoft who headed development of the Xbox video game business, is overseeing the project, one source said.

The Redmond, Washington-based company has held licensing discussions with the music industry and is already demonstrating the entertainment device, the sources told Reuters.

One source, who has seen a demonstration of the upcoming service, told Reuters that it was an improvement over Apple’s iTunes.

"They have been developing technologies that have really good music discovery and community," another source said. "iTunes is the 7-11 (of music stores). You don’t hang out there."

Now, the question that raises in our minds is; is this iPod-Killer a music-video player or could it be the rumored Xbox handheld that Dean Takahashi, the author of Opening the Xbox and The Xbox 360 Uncloaked books, claims will "compete with Sony, Nintendo and Apple Computer’s products, including the iPod"?

Time will tell.