Well, it seems that the popular iPod will have a new competitor. Reuters is reporting that Microsoft looking to develop a device that plays music and video and will rival the popular iPod. Reuters sources state that Robbie Bach, the head of the XBOX project, is overseeing the new development.

It has also been rumored that Microsoft will come out with its own music service. This isn’t too far out because Microsoft has worked with Yahoo! to protect the copyright of the music it uses in its subscription service.

One source close to Reuters who claimed he had seen the music service said that it was an “improvement over iTunes.” Another stated: “They have been developing technologies that have really good music discovery and community. iTunes is the 7-11 (of music stores). You don’t hang out there.”

Engagdet has also received blurry images from a source who claims he took them at a filming of the new device.

It will be very interesting to see how this story unfolds now and longer down the line. Many music subscription services have come out and many so called “iPod killers” have been released as well. None really has put a large dent in Apple’s money jar.

[via Reuters]

Technorati Tags: Gazotto, , , , , .