Every other week a story of an iPod-killer floats around the Internet, but none has looked as convincing as this one.

Microsoft is planning to launch a media player to rival the iPod in time for Christmas, according to entertainment industry executives who say they've been briefed by Microsoft.

The main feature being touted by the computer giant is wireless connectivity, which the iPod currently doesn't have.

It won't be the first music player with Wi-Fi, as the MusicGremlin beat Microsoft to it earlier this year.

Microsoft is also planning a new media software similar to iTunes, so that the player and software will be integrated.

Protypes are reportedly going out to the recording industry in the next few weeks.

"They're proposing an iTunes model approach", said one source to Reuters. "They're now interested in controlling the whole vertical stack of technology from the device to the service to the software."

According to another source, J Allard, the vice president of the Xbox team who worked on the console from inception to launch is involved with the new media player. Microsoft must be hoping that his success with the Xbox will be mirrored by the new device.

Microsoft faces a stern test of its marketing skills, as analysts from research company NPD report that Apple's iPod holds half the media player market, while iTunes is responsible for 70% of music sales in the US.

The yet-unnamed player marks a new strategy for Microsoft in the digital music world, as it has so far been content to let other manufacturers, like Samsung, develop devices that run on Microsoft software.