When Microsoft debuted its first generation Zune platform three years ago, it was a curiosity and then quickly became the butt of jokes. What's really funny, however, is how the doubters didn't notice how excellent this platform became over the intervening years. The first Zune generation included a great device for the day (I still travel with it) but the software was horrible. Zune 2.0, in 2007, really raised the bar with killer PC software, an awesome subscription service, and competitive device hardware. Zune 3.0, from 2008, saw Microsoft actually pull ahead of Apple in some areas and add a suite of excellent online services.

And now here we are with the fourth Zune generation, embodied by the Zune HD but also including a new version of the PC software, improved online services, and new capabilities all around. The broader news with this generation, however, is that Microsoft is making a bigger bet on Zune than ever. Going forward, Zune will be Microsoft's entertainment services brand, and you will see it appear wherever it makes sense, starting first with the Xbox 360. But that's literally the beginning, and in the future, you can expect to see the Zune brand pop-up all over Microsoft's products. I'm talking Windows. Windows Mobile. Whatever.

That's right: Microsoft's Zune platform is on the eve of a renaissance, and I'm putting the haters on notice. Yes, the devices haven't exactly taken off in the marketplace, with the previous generation Zune accounting for a scant 1.1 percent market share. No matter: Zune is bigger than a portable media player. And though we'll be talking a lot about Microsoft's latest portable media player, the Zune HD, in this review, it's important to put that device in perspective. The Zune HD doesn't stand alone. It's part of a wider digital media strategy that will straddle numerous Microsoft products in the years ahead.

But you have to start somewhere.

Zune 4.0: A new Zune generation

As with previous Zune generations, Zune 4.0 includes a variety of hardware, software, and services. Zune 4.0 will also feature the first expansion of the Zune brand, to the Xbox 360 video game console. Here's what I'll be covering in this review over the next several days:

Zune HD. Microsoft previously offered both flash- and hard drive-based Zune devices, but starting with Zune 4.0, the Zune HD is it. Zune HD utilizes 16 or 32 GB of flash memory, and ships in a small variety of colors. (There are black and silver body styles, but if you order from Microsoft's Zune Originals, you can choose between different back plate colors too, as well as various other customizations.)

You want new capabilities? Zune HD has got 'em. It features a gorgeous, multi-touch-compatible OLED screen with incredibly rich content experiences, an HD Radio receiver, Wi-Fi connectivity, a PC-like web browser, and--surprise, surprise--an applications platform by which Microsoft will provide a host of games and other apps, for free. (That's right, they won't charge for the Zune HD apps they make. And more will ship over time.)

Zune HD
The Zune HD is a stunningly beautiful and light digital media player.

There's been some controversy about Microsoft's decision to cancel the previous generation Zune 120 and Zune 16. But I think it was the right one. The Zune HD is a killer product that hits the sweet spot of the portable market, and it provides some interesting 720p HD-based living room capabilities when tied with an AV Dock. Microsoft's previous strategy of competing with Apple on a device-by-device basis was clearly not working. But with the Zune HD, I think they're on the right track.

Zune PC Software. The Zune 4.0 PC software is an evolution of the Zune 2.x and 3.x software and retains that product's excellent design and functionality while adding a number of useful new features. There's also some nice Windows 7 integration pieces, including a mini player mode, taskbar hover playback, and Jump List support. The Zune PC software has been better than Apple's tired iTunes for some time now. With Zune 4.0, the gap only widens.

Zune HD
Zune 4.0 PC software includes a new feature called QuickPlay that exposes your most recent and most frequently-played content.

Zune online services. Microsoft delivered a full-featured set of Zune online services with Zune 3.0, and they've all been evolved nicely in Zune 4.0. We get the improved Zune Marketplace, which movie and TV shows rentals and purchasing for the first time. There's the Zune Pass, a must-have for music lovers whose ears are bigger than their pocketbooks. Zune.net provides a host of new functionality in Zune 4.0, including content playback and video purchase/rent capabilities. And Zune Social connects music lovers with each other and with new content.

Zune Video on Xbox LIVE. Coming in November, Microsoft will extend the Zune into a new product for the first time with the introduction of Zune Video for Xbox LIVE, a feature of the Xbox New Experience on Xbox 360. I will review this functionality when it becomes available later this year.

Zune HD
In November, the first external Zune-branded service will appear on the Xbox 360.

Issues to consider

While I'm excited by the possibilities for Zune going forward, there are a number of issues to consider, and I'll use these as a backdrop to this review going forward. Key among these issues is whether there's any room for another player in a market ever-more-obviously dominated by a single player, Apple. Microsoft says there is, and sees growth ahead. But it's unclear if Zune HD and Zune 4.0 are enough to reverse the slide.

While the Zune HD appears to compete nicely with the iPod touch, it falls short in a few areas. The Zune HD screen, while gorgeous, is a bit smaller than that of the touch, and of course this device lacks the amazing App Store compatibility that drives iPod touch sales. (Microsoft will ship a handful of Zune HD apps, and for free, but this is a weak and late response to the Apple app juggernaut.)

Speaking of ecosystem support, another huge strength of the iPod line is the huge selection of iPod-compatible hardware devices, most of which are based around the iPod dock connector. The Zune has nothing like this, and those who choose the Zune have much fewer add-ons (including such things as cases and car attachments, among others) from which to choose.

While the Zune HD can output in 720p HD when connected to an HDTV via the AV Dock, this is really a secondary way to enjoy Zune-based content in your living room (or it soon will be). Microsoft sees its Xbox 360 as the entertainment hub in the living room, and certainly as the Zune software gets more and more entwined into the 360 over time, the console will become more viable in this regard. But the HD-based Zune HD output seems a bit redundant. I'm curious to see how the different Zune-based living room solutions stack up.

One of the Zune's biggest advantages over the iPod is its Zune Pass subscription. But few people are willing to pay $15 a month for a music service. Is there some chance that Microsoft could add other content types to this subscription and create an On Demand-like Zune service?

OK, that's enough for now. In the next part of this review, I'll examine the Zune HD device hardware and see how it stacks up against Apple's late 2009 iPod lineup.