New Zune HD coming from Microsoft?

Mary-Jo Foley of ZDNet says that Microsoft could be working on a new Zune HD model, which isn’t really that good timing considering the new iPod touch has just been announced earlier this morning. If it were to debut sometime next year, then we wish Microsoft all the best, and hope that the hardware as well as software support and services available are able to be ahead of what Apple currently offers so that it will not be rendered obsolete when Apple rolls out yet another generation of iDevices. It was speculated that the Zune HD might just be powered by an ARM processor of sorts, featuring several UI changes that will clearly take its cues from the upcoming Windows Phone 7 operating system.