According to an interview between Dwight from TechBlog and Bryan Lee, the corporate vice-president for Microsoft’s entertainment business, it seems as if Microsoft will be entering the flash-memory MP3 player market, currently dominated by Korean and Chinese manufacturers.

Lee said “it would be logical” for the Zune platform to see an annual or twice-annual refresh of its software and hardware. He said there will be other models, including flash-memory-based Zunes.

What this means simply is it is a major challenge to the Apple’s iPod nano, along with SanDisk and Samsung yepp’ who have made a name for themselves for providing high-quality flash-memory based MP3 players.

The above interview by Dwight also brings up the infamous side of Zune’s Wi-Fi feature, the 3 day/3 play DRM protection. It is said that the music industry will be reviewing this protection along with Microsoft, as it seems that this restriction is exacerbating the already limited Wi-Fi features. It will be interesting to see the conclusion that Microsoft will come to. Whatever it is, they’ll need to find a sweet spot that will not only please the music industry, but also the current and potential Zune customers.