While I doubt Apple would ever admit to changing their beyond-successful iPod line in response to anything Microsoft is doing, later this year they are planning to release a WiFi iPod. Foxconn and UFI have been chosen as the companies to fab the units, with Foxconn responsible for assembly and USI producing the wireless components. Production has yet to begin, however, and Apple hasn't made clear how the WiFi portion of the iPod will work. With players like the Zune, you're able to share music with other Zune users in the nearby area (DRM laden of course) among other things, but there has been much criticism over the scope of its wireless capabilities.

It's a field in which Apple could easily outshine Microsoft, or could just as easily shoot themselves in the foot.