Microsoft launches new Zune to rival Apple iPod

* New Zune on sale Tuesday, ahead of shopping season

* 32 gigabyte version cheaper than comparable Apple iPod

* No plans for a “Zune phone”

SEATTLE, Sept 15 (Reuters) - Microsoft Corp MSFT.O launched a slimmer, revamped version of its Zune handheld music and video player on Tuesday as the software giant makes its latest attempt to compete with Apple Inc's AAPL.O ubiquitous iPod.

The touch-screen Zune HD, which features a radio receiver and wi-fi, is priced just below Apple’s comparable iPod Touch in the hopes of grabbing market share as the U.S. holiday shopping season nears.

The device, which goes on sale on Tuesday, has a claim of technical superiority over Apple’s iPods, with a state-of-the-art organic light emitting diode screen and ability to relay high definition video to a television.

But it will struggle to make an impact on the stylish iPod, which took the digital music player mainstream when launched in 2001 and now controls more than 70 percent of the market. The original Zune did not come onto the market until 2006.

Microsoft announced the pricing of the new models last month, pitching its black 16 gigabyte model at $219.99 and platinum 32 gigabyte version at $289.99. Customized red, green and blue colors are also available.

At the time, that was well below $399 Apple charged for the 32 gigabyte iPod Touch, but Apple has since cut prices and is now offering an updated version of the same memory size for $299. Apple also now offers a 64 gigabyte Touch a video camera on its iPod Nano model.

There are no plans to add a camera to the Zune, marketing manager Brian Seitz said on Monday. He also said there were no plans to create a Zune phone, which might rival Apple’s popular iPhone, despite recurring talk in the tech industry. He did, however, say that Zune’s capabilities could be added to other platforms, including Windows Mobile, suggesting that a smartphone with a Zune function may yet be realized.

Microsoft’s player is backed by the Zune Marketplace, which rivals Apple’s iTunes store, where users can stream, buy or rent music, videos and films.

The device features only a handful of applications, such as MSN weather and some video games, but it is planning to add applications featuring social networking sites Twitter and Facebook in November. Unlike Apple, Microsoft does not have an open marketplace for application development, and is not charging for them.

Reporting by Bill Rigby; Editing Bernard Orr