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Microsoft plans to follow up the lackluster release of its first generation Zune portable media player with a new model by the end of the year.

The Zune 2.0 will come with standard and flash based drives, but will it manage to garner more market share than its predecessor?

Some labeled the Zune as a potential “iPod Killer” in the hype preceding the device’s launch last year.

Months later, Apple is happy to report that the iPod is alive, well, and humming along to the tune of 76% market share of all portable devices.

In contrast, the Zune barely has a pulse.

Undaunted by lack of presence, however, Microsoft has plans to launch the next generation of Zune players in time for this year’s holiday season.

Zune Scene has the details on the upcoming hard drive and flash versions of the player:

The hard drive version looks like the generation 1 Zune, but is thinner. It has a larger hard drive and still uses the doubleshot. The flash based player he said is about "3 by 1 1/4 by 1/4 inches" in size. It is video capable and he said the screen covers about 75% of the front, similar to the hard drive Zune. The flash player has Wi-Fi and also uses a double shot.

Microsoft has a massive mountain to climb just to make a dent in the iPod’s massive lead in the consumer marketplace.

Will flash memory and large screens represent enough of a “wow factor” for users to draw them away from Apple’s flagship product?

The answer most likely rests in what Microsoft decides to do with the WiFI capability of the device, which is the clear feature that separates the Zune from the iPod.

Right now, users can only use the WiFi to connect to other Zune’s in order to share items, but if Microsoft can give users the ability to wirelessly connect to the Zune Marketplace and grab music on the go, it would give the device a distinct identity separate from the iPod.