Microsoft is reportedly readying an iPod killer set to hit retail shelves in time for the end-of-year holiday shopping season.

Microsoft's portable music and video player is rumored to include wireless connectivity, enabling users to download songs without being tethered to a PC, according to a report Thursday from The New York Times.

Microsoft faces an uphill battle in its efforts to take on Apple, which shipped 8.5 million iPods in the second quarter of 2006 alone, marking a 61 per cent increase from its sales for the same quarter in 2005. Apple is due to announce its third-quarter earnings July 19.

Microsoft has already introduced initiatives to compete with Apple's iTunes music service. In May it launched along with MTV Networks the Urge music store as part of the Windows Media Player 11 public beta. The Urge store allows users to purchase songs for $0.99 and albums for $9.99, as well as buy a $15.00 monthly subscription. The service is not compatible with Apple Macs or iPods.