Microsoft Delves Further Into Manufacturing With Zune Plant - WSJ.com

 If at first you don't succeed,...

Microsoft Corp. (MSFT), a colossus built on software, is making a new push in hardware manufacturing by building a factory in China to produce its Zune media player device.

The factory will produce a second iteration of the Zune, which has so far failed to impress in its effort to compete with Apple Inc.'s (AAPL) popular iPod. 

The second iteration of Zune will include a number of different versions with varying prices and degrees of storage capacity, according to Jason Reindorp, Microsoft's marketing director for Zune, although he declined to offer specifics. Web sites that follow the device have reported rumors that the newest versions of the Zune will be thinner and will include some smaller-capacity Flash-based players, similar to the popular iPod nano.

Source: Article - WSJ.com