Steve Ballmer, CEO of Microsoft, has confirmed that they are working on an iPod competitor. They are going to take it a step further and combine the iPod clone with a phone. Apple, of course, has long been rumored to be working on an iPod phone of their own.

"In five years are people really going to carry two devices? One device that is their communication device, one device that is music? There's going to be a lot of opportunities to get back in that game. We want to be in that game. Expect to see announcements from us in that area in the next 12 months", said Ballmer. Apple is reportedly close to the release of their own phone, which means Microsoft could be behind by the time they enter the market. On the other hand, Apple will prove and develop the market for Microsoft. People will be used to the combined devices and accepting of them by the time Microsoft enters.

In related news, Apple issued a software update Wednesday for its recent iPod models - the Nano and the video-capable iPod - allowing users to set how loud their digital music players can go. If your kid is crazy about rock music then you can lock the volume setting with a 4 digit combination code. The new update will work with iPod Nano and iPod Video only.