Zune HD to Challenge iPod Touch?

One thing you have got to love about Microsoft is its persistence. Zune 1.0 was supposed to kill the iPod for good. Zune 2.0 was supposed to finish what Zune 1.0 couldn’t. Now there are a whole lot of rumors out there about Microsoft’s next attempt with Zune, this time going head to head with the mighty iPod Touch. To its credit, Microsoft realizes what let down the first two Zunes. So it is not out of the realm of possibility for Microsoft to be working on a home, gaming, and mobile all-in-one solutions for consumers.

Microsoft has Xbox going for it as well. If the rumors are true with Zune HD, we will be seeing a “Live Anywhere” device that goes beyond anything Microsoft has ever done in the past. The company insists that ZuneHD is not a response to iPhone/iPod Touch:

When this handheld arrives, people will say it is Microsoft’s response to the iPhone, the Nintendo DS, the PSP, and so on, but it will be pretty evident that this device, its software, and services have been in the works for a very long time

We have heard that from Microsoft before. Either way, Apple is king in this market and Microsoft has a lot of catching up to do. It wouldn’t be too bad if Zune HD put up a real fight against iPod Touch, but something tells me MS will let us down again.

Your take: can Zune HD effectively challenge iPod Touch?