Microsoft working on a touch-screen equipped Zune HD ?

Rumours that Microsoft is readying a new generation of its digital media player Zune featuring a touch screen.

Zune HD is the name expected for the new device, as Engadget reports to have found advertising material mentioning the new name.

Such a move by Microsoft would clearly target Apple's iPod touch which has seen a big success, especially since the introduction of the App Store and third party applications.

On the other hand, Microsoft has sold barely more than a million of Zunes since its introduction and has even faced a major bug late last year, causing the units to freeze.

Maybe this new model will help the company to revive the sales and grab a part of the portable media players market. Let's not forget that Microsoft is also the maker of a well known console called XBox 360, which features several interesting game titles which could be ported to the yet to be announced device.