Microsoft will start selling a digital music and video player to compete with Apple's iPod by Christmas, sources close to the matter said on Wednesday (July 5).

Microsoft will start selling a digital music and video player to compete with Apple's iPod by Christmas, sources close to the matter said on Wednesday (July 5).

The company is also said to be planning to have a wireless feature on the new player to enable the downloading of music and videos over-the-air by users, according to one source.

Microsoft Corp. has been touting the new player to record companies in the last few weeks as well as a new integrated media software application developing a system akin to Apple Computer Inc.'s iPod/iTunes integrated ecosystem.

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

Both Apple's iPod player and iTunes Music Store are runaway leaders in their respective market sectors. The iPod has more than half of the digital media player market, according to research company NPD, while iTunes accounts nearly 70 percent of digital music sales in the U.S.

Analysts believe that the Apple's simple approach to providing an integrated seamless ecosystem for digital media has been key to Apple's success and think that Microsoft now wants a more significant stake in that market.

--Reuters