Zune HD will be a music player, not a super-device

After months of increasingly wild rumors, CNET's Ina Fried got the official scoop yesterday: Microsoft is indeed releasing the Zune HD this fall. The device will feature an OLED touch screen, high-definition video output (with an optional add-on), a version of Internet Explorer (it sounds similar to the version planned for Windows Mobile 6.5, which uses the core IE6 engine but adds Flash support, as well as some technology from IE8 to better support JavaScript), and HD Radio.

I spoke to the Zune marketing team this morning, and they didn't have much to say beyond those points. In fact, they weren't originally planning on saying anything until later this summer, but felt they needed to set expectations for Zune customers in light of all the rumors.

Here's why: the Zune HD isn't going to be the super-device that some geeks had been hoping for. It will play games--just like today's Zunes, which ship with a couple simple games--but it won't be a full-fledged gaming device like the Sony PlayStation Portable or Nintendo DS. It won't have its own application store, although Microsoft hinted it might connect to the forthcoming Windows Marketplace for Mobile, which could let third-party apps like Facebook and Pandora find a home on the device. It won't feature WiMax connectivity, although that might be planned for a future touch-screen phone with a similar form factor.

In other words, this is Zune 3.0, a music-focused device with a nice touch screen. It'll support video and apps, sure, but the team is focusing on improving the music-playback experience--think album art, more detailed artist pages with images, perhaps lyrics or video content.

Will these features be enough to get users to choose a Zune HD instead of an iPod Touch? The main difference seems to be HD Radio. I believe Microsoft when they say FM radio is the Zune's second-most important selling point, but Zune users are a very small portion of the overall MP3 player market--the tens of millions of users who bought an iPod didn't care about radio. There may be some other killer features we don't yet know about, and there's always the Zune Pass to consider--a great deal at $14.99 a month for unlimited streams and 10 permanent downloads--but I think the uphill battle against Apple will continue.

As far as the other half of the news goes, it's been clear for some time that Microsoft was getting ready to integrate the Zune Marketplace into Xbox Live. The company will have more details to show off next week at E3, so I'll save further comment until I see what they've got.

The author:

Matt Rosoff is an analyst with Directions on Microsoft, where he covers Microsoft's consumer products and corporate news. He's written about the technology industry since 1995, and reviewed the first Rio MP3 player for CNET.com in 1998. He is a member of the CNET Blog Network. Disclosure.