Microsoft may attempt to create its own version of Apple's 'iPod economy' - third-party manufacturers who create add-on products - for its rumoured future iPod competitor.

The company has dismissed chatter about its purported device as "rumour and speculation", but an overwhelming tide of reports claim to offer further details of what the media player will be. It's code-name, according to multiple reports, is Argo (or Zune).

Development of the device is being conducted by Microsoft's Xbox team. The device will be wireless and will support video and music. It looks a little like an iPod, some reports claim.

iLounge this morning reports that Microsoft is approaching third-party product manufacturers asking them to join its own alliance of developers of add-on kit for its future device.

Stealing yet another leaf from Apple's book, the company will use its own proprietary docking mechanism for the device. Manufacturers of third-party kit will be asked to pay a licence fee for access to the technology. This fee will be set lower than that of Apple's 'Made for iPod' scheme, the report explains.