Microsoft Pushes Zune HD Out the Door

Microsoft's Zune HD is on sale now - but will an HD radio receiver and gorgeous 3-inch OLED let it compete against the iPod touch and tens of thousands of apps?

Microsoft’s latest effort in the portable media marketplace, the Zune HD, goes on sale today—and industry watchers are waiting to see how the consumer marketplace responds. While some hailed the launch of Microsoft’s Zune line back in 2006 as a potential death knell for Apple’s iPod business, Zune have largely failed to capture consumers’ attention, with the original Zune’s “Welcome to the social” Zune-to-Zune sharing feature largely serving to highlight the paucity of other Zune players out in the wild. Meanwhile, the main competitor to Apple’s iPod business turns out to be Apple itself, cannibalizing iPod sales with sales of iPhones and iPod touches.

The Zune HD aims to change that, offering up a spiffy new hardware design featuring a 3-inch 480 by 272-pixel OLED touchscreen display, an integrated HD Radio receiver, Wi-Fi connectivity, and the ability to push out high-definition video via a dock accessory. The Zune HD also begins to step into the territory of the iPod touch—offering an integrated Web browser, a virtual QWERTY keyboard—while slightly undercutting the iPod touch prices: a 16 GB Zune is on sale for $220, while a 32 GB edition goes for $290. Unlike Apple’s recent decision to roll a video camera and FM receiver into the iPod nano, the Zune HD remains focused on video and music—it’s a media player first and foremost…unless someone expects that Wi-Fi and Web browser to make it an Internet device.

The main thing that will keep the Zune HD from competing with the iPod touch is a lack of applications: while the Zune HD does feature a Web browser and Microsoft is shipping side-loadable casual games with the device (retooled to support the multitouch display), there is no equivalent of the iTunes App Store where users can download programs to customize and expand the functionality of their Zune HDs. There is an Apps tab on the device and in the Zune software, and Microsoft says free clients for services like Facebook and Twitter are on the way, along with gaming titles like Project Gotham Racing. But they won’t land until later this year. Microsoft has quietly been approaching at least a handful of successful iPhone app developers about building apps for the Zune HD, and the company says it is building additional apps itself as well as working with third parties on expanding the Zune application pool.

Will the Zune HD capture market attention where earlier Zunes did not? Microsoft thinks so…and it has essentially killed off everything else in the Zune line to focus on the Zune HD. For folks considering a Zune, the Zune HD is now essentially the only game in town.