Toshiba planning an iPod mini competitor?

Speaking of the iPod (not that we aren't always talking about the iPod), but the word on the street is that Toshiba is planning to use their new 0.85-inch hard drives in a supertiny new MP3 player which would be smaller and lighter than the iPod mini. Should be out next year, though by that point we fully expect Apple to have shrunk down the iPod mini just a little bit more.