Microsoft to Sell IPod Rival

Microsoft Corp. will start selling a wireless digital music and video player to compete with Apple’s iPod by Christmas, sources close to the matter said Wednesday.

The new player will let users download music and videos over the air, according to one source, a feature that would give it an edge over the iPod.

Redmond, Wash.-based Microsoft has also been developing an application akin to Apple Computer Inc.’s iPod/iTunes integrated system, another source said.

Record companies are expected to receive prototypes to test in the coming weeks.

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 Group, and iTunes accounts for more than 70% of digital music sales in the U.S.