Microsoft is serious about the Zune, despite lackluster sales of the player. The Zune is aWiFi-capable video and audio player with an FM tuner and Microsoft’s iPod rival. It’s been lagging at eight per cent in total sales in the hard drive player category, a far cry from Apple’s dominance. The next Zune iteration is rumored to be either a flash-based player or a Zune player with widescreen with possibly a Zune phone a short while after. (Go to our previous Zune postings for more information.)

In opening a Zune plant, Microsoft will have more control in the direction of future Zunes. “There are definitely some cost efficiencies, but the more important thing from our perspective is the flexibility and control we have in creating a device from scratch and making it down to the last component what we want it to be,” Jason Reindorp, Microsoft’s marketing director for Zune.  The first-gen Zune uses the shell template of the Toshiba Gigabeat and uses components also supplied by Toshiba.

[via marketwatch]