Microsoft has unveiled the second generation of its Zune media player, designed to compete with the dominant player in the digital music business, Apple’s iPod.   Bill Gates, Microsoft chairman, launched the first generation almost a year ago, which made little impact on iPod’s dominance, but Microsoft expects the new Zune to become the clear number-two to Apple by the end of this financial year.

 The new 4Gb and 8Gb models feature the Zune Pad, a touch-sensitive button for navigating on the device, and have a wireless feature that can sync the device with the owner’s home wireless network. Whereas these models employ Flash memory, there is also a new 80Gb hard drive model.

 Microsoft said it had sold about 1.2m of its first-generation 30Gb Zune player. Apple has reportedly sold more than 100m Ipods in the six years they have been on the market.