Microsoft will put little-seen music and video player on the market for $219.99 - less than an iPod Touch.
The Zune HD is slimmer than previous version and has a touchscreen for the first time. It comes in five colours and has a built-in radio receiver, wi-fi, and can display high-definition video to a big screen.
The devices are available for pre-order but won't hit shelves until September 15. The 16GB version is $219.99, and the 32GB version is $289.99.
The Zune has still to be released in Europe.