Redmond (WA) – Apple may not be the only one dominating tech headlines tomorrow. Apparently, Microsoft is set to refresh its Zune family tomorrow as well and may use the media frenzy to piggy back on Apple. The company is expected to also apply a "redesign-storage upgrade-new colors-price cut" formula for this new product generation. However, behind that shiny new surface Microsoft is said to be offering upgraded Zune software and an updated Zune Marketplace service that may include exclusive interactive video programming, wireless access to the online store, games, and other content.

Following the traditional hype before an iPod announcement, we noticed much more chatter about Microsoft’s Zune, which many believed was a dead fish in the water. Zunerama was first to report that Wal-Mart's stocking system indicates that 80 GB and 4 GB Zunes are discontinued. Zune has been experiencing tough time since it arrived on the market. Several online media followed with more information about possible new players.

Zune hardware: New colors, storage upgrades, price cuts

Hard drive-based Zunes currently come with 30 GB or 80 GB capacity. Replacing the 80 GB Zune is a 120 GB model, which sells for $250.

The flash-based Zune will get a slight redesign, a storage upgrade and a slight price cut. The 4 GB model will be phased and see a new 16GB black model. The new price points will put the 8 GB at $149, down from $199, while the 16 GB version will cost $199, according to reports. Engadget reported that that the 8 GB model will get a new blue color.

Zune software updated

Microsoft should be revealing a new software package, which was briefly hinted to on Fry’s website. A Buy from FM features enables users to tag any song heard on the radio station and purchase it later when Zune is synced with the PC. Also new is a Channels option, basically custom programming stations from a variety of sources that deliver personalized playlists to the device. Games are also in the works. You will be able to select any song from your playlist as background music while you are playing a game. The music player will come preloaded with free games, including Hexic and Texas Hold'em.

A new Device to Cloud feature capability could become the killer feature of the new Zunes. Device to Cloud extends reach of Zune's social features and allows users to browse Zune Marketplace on the go, update their music collection, directly buy songs tagged from FM radio, exchange favorites with friends and refresh Channels.

Zune Marketplace: Exclusive content and interactive video programming

Taking a page from Apple's book, Microsoft also tied Zune to its own music store dubbed Zune Marketplace. The service now offers more than 3 million DRM-free songs music videos, audio/video podcasts and TV shows. The Zune Marketplace also features $14.95 a month all-you-can-eat music subscription service, a feature that Apple is expected to introduce tomorrow for $129.99 per year. Microsoft is rumored to add high-definition movie downloads to the Zune Marketplace next month.

Also new may be exclusive content: NBC is already available and according to the Hollywood Reporter, Microsoft is negotiating exclusive video programming deals with several Hollywood studios. The plan is to leave Apple out of the loop for certain shows or at least have Zune syndicate the content first.

Besides the content expansion, Microsoft is reportedly working to use the Zune brand on Windows Mobile handsets and Nokia mobile phones, effectively expanding choice of platforms used to access Zune Marketplace content beyond the music player. According to analysts, Microsoft will not develop a Zune mobile phone as the move could alienate its Windows Mobile partners.

Still, analysts are not convinced that Zune can pose a serious threat to Apple's entrenched music business. Envisioneering's consumer electronics market researched Richard Doherty described the Zune is a "me too" product that isn't selling very well. "No name brands have sold tens of millions of players," he told the New York Times. Microsoft has sold somewhere between two and three million Zunes, while Apple’s iPod is approaching the 200 million mark.

But then, Microsoft has told us from the beginning that its Zune strategy is a multi-year effort. This will be year 3.