When the Zune first debuted in 2006 (see my review), Microsoft sold only a single hardware model with a 30 GB hard drive. It was aimed at Apple's classic iPod (since renamed, literally, to iPod classic) and offered similar functionality as well as an identical price point. The first Zune wasn't anything special, but last year Microsoft replaced that single hardware product with two very new designs, a flash-based model that came with 4 or 8 GB of RAM (see my review), and a new hard drive-based model that shipped with 80 GB of storage (see my review). These devices were excellent and they offered compelling alternatives to the iPod devices that Apple was selling at the time.

What a difference a year makes. Since then, Apple has updated its iPod nano player to a design that is curious reminiscent of the Zune 4/8, though in typical Apple fashion it is also considerably thinner (see my review). Also, while Apple has declined to do much with the iPod classic beyond changing the size of its hard drive, the company has dramatically improved the iPod touch, which offers a nicer screen than that of the Zune 80, albeit with much less storage. (The iPod touch uses flash memory instead of a hard drive.)

Microsoft, alas, has stood still from a hardware perspective. This year, the Zune 4 and 8 are being replaced by the Zune 8 and 16. The Zune 80 is being replaced by a Zune 120. But the only meaningful differences between these devices and last year's models are the storage capacities they offered. Microsoft hasn't changed the hardware form factor one bit.

My initial reaction to this news was one of pessimism. Was Microsoft giving up on its hardware? Why would the company do nothing to improve its devices from a form factor perspective when its biggest competitor, Apple, as always, would be offering changes across the board?

After spending time with the devices and seeing the changes that Microsoft has made to the device firmware and the PC software, however, I've begun to see the genius of the company's strategy. Keeping to the same still-decent hardware design as last year protects the investments that Zune users have made with accessories and it relieves them of the mindless need to upgrade, a problem that Apple's users face on a regular basis. By putting all of the meaningful Zune 3 improvements into software, Microsoft is rewarding its customers, not punishing them. And that's all the more true when you realize that every single functional improvement that Microsoft made this year to the Zune platform is available to existing customers. Yes, including those who purchased the original Zune 30.

A quick look at the hardware

OK, we'll get to the firmware and software improvements in just a bit. If you're new to the Zune platform, or are ready to upgrade, what you'll find this year is the same two form factors that Microsoft offered last year. There's a smaller flash-based player and a larger, hard drive-based player. Both are brick-like, with squared off edges, and larger than the iPods with which they compete. But they're not exactly old fashioned looking, and to the casual observer, either could easily be mistaken for an Apple product. (Indeed, this has happened to me on more than one occasion in the last 30 days.)

While supplies last, you can choose between all of last year's and this year's capacities. So for a short time, you can still purchase Zune 4 and Zune 80 devices. Over time, these will disappear, leaving just the Zune 8/16 and 120. The Zune 8 is available in a number of colors, including an attractive new blue color, and it costs $149. The Zune 16 is available only in a new shiny black fascia, front and back (most Zunes utilize a silver backing) for $199. The Zune 120, like the Zune 16, is available only in the shiny black and costs $249.

I've been using both a Zune 16 and a Zune 120 specifically for this review, but I've owned at least one of every Zune model ever made, and I've upgraded a few other Zunes to the latest firmware for comparison. There's no difference at all between the form factor of the Zune 4s, 8s, and 16s, aside from available color schemes. Ditto for the Zune 80 and 120. I do think that the shiny black fascia on the Zune 16 and 120 is prettier than the matte black offered last year, and suspect that most people would opt for the shinier (rather than matte) versions if given a choice.

If you're not familiar with the Zune hardware, it offers a few advantages over comparable iPods. All Zunes include an FM tuner, functionality that requires a costly and extraneous hardware add-on for the iPod. All Zunes also include 802.11b/g wireless networking, functionality that is only present on Apple's high-end iPod touch.

Zunes also fall a bit short of comparable iPods in a few ways. The most obvious is the screen: Whereas Apple offers wonderful high-resolution and high PPI (pixel-per-inch) screens, Microsoft's devices still offer 320 x 240 screens with decent but not exceptional picture quality. Two of Apple's iPods, the iPod touch and nano, offer an accelerometer that, in some cases, automatically rotates the screen display to match how you're holding the device; there's nothing like that on the Zune, which in many ways is a more utilitarian product than the iPod.

I'd point out that the iPod features listed above do nothing to improve the music experience on those devices. But the unique Zune hardware features listed above are, in fact, utilized to improve the music experience, especially that of music discovery. This is important to remember because the Zune truly does exceed the iPod when it comes to enjoying music. And most of that prowess is software-based.

Zune 3 firmware

Once you've installed the new Zune 3 PC software--which I'll be reviewing soon--and plug in any Zune device, even the original 30 GB Zune, you'll be upgraded to the new Zune 3.0 firmware release. This software looks and works much like its predecessor, so if you're familiar with the Zune 2 platform, you'll feel right at home with Zune 3. (This wasn't the case with the jarring move from the inferior Zune 1.x platform to Zune 2.0.)

In fact, the similarities are such that you might miss the changes if you're not paying attention. The Zune device's top-level home menu doesn't appear to have changed until you scroll down. Now, in addition to the music, videos, pictures, social, radio, podcasts, and settings options seen in the 2.x firmware, two new items--marketplace and games---will appear, nestled between podcasts and settings. (The games option will only appear if you choose to install the new Zune games, discussed below, during the Zune 3 firmware install via the Zune PC software.) A third new item, audiobooks, will appear only when you copy one or more audio books to the device; I will discuss this capability below as well.

These three new features--marketplace, games, and audiobooks--represent most of the new functionality exposed by the Zune 3.0 firmware. A fourth, Buy from FM, rounds out the list. Let's examine each.

Device access to Zune Marketplace

When the Zune first debuted with wireless functionality in 2006, many were excited by the thought of wirelessly buying songs and other content via the device. This was not to be: The original Zune utilized its Wi-Fi hardware for one feature only, a lame device-to-device music sharing capability that was rendered useless because so few people owned a Zune. (As I noted in my review of that product, the only thing wireless functionality did for the original Zune was to cause it to deliver worse battery life.)

In Zune 2, Microsoft better utilized the device's Wi-Fi radio by allowing wireless sync, a boon to anyone who wants to keep their Zune up-to-date but isn't interested in continually tethering it to the PC. This was (and still is) a great feature, and it remains somewhat of a differentiator between the Zune and Apple's products.

Now, with Zune 3, we finally get the long-awaited wireless access to Zune Marketplace, Microsoft's online store. (Sadly for Zune fans, Apple beat Microsoft to the punch here by first offering iPod touch and iPhone users wireless access to the iTunes Store; note, however, that this feature still isn't available to most iPod users.) This functionality is accessed via the new top-level marketplace menu item and it works in a very Zune-like way. That is, browsing the Zune Marketplace on the device works just like browsing your own media library.

When you select marketplace, you're presented with a very simple menu consisting of the choices top songs, top albums, new releases, search, and cart. These choices are hard-coded into the device, so they load instantaneously. Subsequent navigation speed will vary based on the speed of your Wi-Fi connection, I guess, but I've found the device/store experience to be excellent overall.

In top songs, the Zune's excellent two-dimensional "twist menu" (which I've always thought of as the "crossbar" UI; it's also used in Microsoft's Media Center software) is used to good effect. Across the top horizontal menu you'll see categories like rock, hip hop, r&b, pop, electronic, latin, reggae, world, country, classical, jazz, blues, spoken word, christian, soundtracks, and kids. As you select a category, a list of songs, complete with album art, appears vertically. Select a song, and you'll see a display of the song's album, with the correct track highlighted. (And again, thanks to the genius of the twist menu, you can still navigate left and right from here to view the albums associated with the other top songs.) Select the song to preview (or, with a Zune Pass, play) it. Or, you can add it to your cart.

Two things here. First, those that do opt for the $14.95 a month Zune Pass subscription will see a number of important new capabilities with Zune 3, and this is one of them. You can literally play entire songs and albums (but not Picks or Collections playlists, oddly) from the Zune Marketplace, over wireless, on your device. This streaming feature is amazing, and while it may also cause battery issues, imagine the uses: You could attach a Zune device to portable speakers and a power source anywhere with a Wi-Fi connection and have access to millions of songs online at any time.

Second, the ability to buy songs wirelessly, while not unique, is in fact available to anyone with any Zune device, a claim Apple can't make with its own increasingly complicated family of iPod products, each of which offers a difficult to remember range of unique features. If you have a Zune, this feature just works and it doesn't matter which Zune you have. Score one for the good guys.

Access to other areas of the store works similarly, though the new releases area, for some reason, displays in a grid of album art and does not utilize the twist menu until you dive into a particular album. The search functionality utilizes the same slot-machine-style character entry system that's used to type in a passcode for a protected wireless network. It works fine.

If there's a problem with the device's Marketplace access, it's that there's no way to tell on the device if the song you're buying is unprotected MP3 or protected WMA, and let's be honest, that's an issue because WMA is a dead-end. Also, I'd like to see some way to edit the list of genres I see in the store. I don't care about Country or Spoken Word, for example, but I would like to browse New Age. It's not even a choice.

Overall, Microsoft's first stab at device access to their online store is excellent. Note, however, that it is limited only to audio content. You can't browse or purchase video or other content from the device.

Zune games

The Zune's support for games in Zune 3 is somewhat unusual at this point because the feature isn't completely implemented, and Microsoft isn't willing to discuss where they're going with it. For now, what you get is two free games, Hexic (a somewhat classic Tetris-type game with sliding and rotating tiles) and Texas Hold 'Em (the too-popular variant of poker that has at least temporarily ruined this game). They're installed on the device, optionally, with the Zune 3 firmware and are not managed at all via the PC-based Zune software, at least for now.

There are no options for downloading or purchasing any other games, and Microsoft is mum about its plans in this area. "We don't have any announcement about new games at this time," Microsoft senior product manager Terry Farrell told me in a briefing earlier this month. "Games are not a core story for the Zune platform." He did note that the games are built on the platform used by XNA, Microsoft's cross-platform development environment for Windows, the Xbox 360, and the Zune.

As with the iPod classic and nano, Zune games are somewhat limited by the device's hardware buttons, so they must work within the confines of the Zune's Zune pad and Back button. And they're fine, cute little diversions, nothing more. I'm told to expect more news about Zune games by the end of the year.

Audio book support

The lack of audio book support was one of the weirder functional deficiencies of earlier Zune platforms, but that's been rectified with Zune 3. That said, the Zune's sudden support of audio books occurs outside the Zune ecosystem, a move that breaks some core Zune principles. That is, the Zune platform was created specifically so that Microsoft could control the experience at every level, thereby assuring its quality, similar to what Apple does with its iPod platform. But audio book support occurs outside of Microsoft's control and is handled instead via two partners, Audible (the dominant supplier of audio books) and Overdrive.

Here's how it works. Audio books will never appear inside the Zune PC software. And on the device, you won't see an audiobooks top-level menu item until and unless you "side-load" audio book content onto the Zune device using Audible's or Overdrive's proprietary software. I've been listening to Audible audio books for years, so I have a lot of their content available for testing. (Full disclosure: Audible is a sponsor of my Windows Weekly podcast, though I always purchase content from them with my own money.)

Side-loading Audible content onto the Zune is simple enough, though I should point out that the Audible Manager software that's required for this is fairly ugly and utilitarian compared to Microsoft's beautiful Zune PC software. (It looks like it was last updated when Windows 98 was still new.) To configure Audible Manager for any Zune device, you simply choose "Microsoft Zune" from the software's devices list, plug in the device, and drag the audio books you want from the Library to the device. You'll have to activate the device with Audible, of course, and the Zune utilizes the same audio book format (4) as does the iPod, if you're curious about such things.

I had never heard of Overdrive, but the service is interesting: They offer free downloads via public libraries in the US and elsewhere (but not, alas my town's), or you can purchase audio books directly from the service's publisher and retail partners. If you live in an area supported by Overdrive's free lending program, this is a very interesting option.

Once you've loaded your Zune with audio book content, a new audiobooks top-level menu items appears between podcasts and marketplace. Device support works as expected, but is somewhat limited. Back and Forward navigates between chapters, which can be big chunks of time. And the device auto-saves your current position in the book when you exit and choose other content. There's no other bookmarking support, per se. Book position is correctly displayed in Audible Manager back on the PC, but isn't synced with the PC application (and thus, potentially, to other devices). This is a limitation of Audible Manager, but it speaks to the problems with letting others control your destiny in this fashion.

Put simply, audio book support is a welcome and long overdue addition but it's not as seamless as the rest of the Zune experience.

Buy From FM

While the three previous features are all exposed as major, top-level menu additions, the fourth major new device feature in Zune 3.0 is somewhat hidden. But make no mistake, this is an important addition to the Zune, a big differentiator with the iPod, and yet another reason why the Zune's music discovery features make this platform better for music lovers than Apple's increasingly complicated solutions.

In previous versions of the Zune platform, FM support was basic enough: You'd navigate to the top-level radio item and be presented with a simple depiction of the FM broadcast band, from 87.5 to 108 MHz. Pressing left and right on the Zune pad, you could jump from station to station using seek, and if you clicked the center of the Zune pad, you were given an option to add the current station to your presets; presets appeared (and still appear) on the FM broadcast band line as solid circles. (A second option on this pop-up menu toggled seek.)

With Zune 3, the FM radio functionality is dramatically improved. Now, when you click the center of the Zune pad, you're presented with a third new option, add to cart. This lets you purchase or download the song you're currently listening to, a feature that is both wonderful and obvious.

From a broad perspective, what this feature does is complete the circle from a music discovery standpoint because the Zune now supports the top two ways in which people discover music: From friends and from the radio. The friends portion is handled through the platform's Social functionality, which I'll examine more closely in a later part of this review, and expanded to include other people who are not necessarily friends via its Picks, Collections, and Social functionality. Now, with Buy from FM, Zune owners can automatically tag songs they like on the radio for later purchase or download. (Or, if you're in a compatible Wi-Fi hot spot, for immediate purchase or download.)

This feature is made possible by radio stations that broadcast RDS or RT+ meta data alongside songs; this is the information that modern car stereos use to identify the name of the station, the type of content they play, and the name of the current song (along with artist, album, and other information). The Zune matches this information to its catalog of songs on Zune Marketplace and, if it's available, away you go.

I've had good success with Buy from FM, though I've noticed that radio station and song display sometimes take a bit of time to appear and of course the availability of this data varies wildly from station-to-station. Those in major markets will likely experience better results. But what an excellent addition, and a true differentiator.

Other firmware improvements

In addition to the aforementioned major new software features, the Zune 3.0 firmware also brings some smaller, positive changes, all of which are the result of user feedback. Key among these are the addition of a clock, which appears in the upper right of the screen, and a screen lock, which offers a four-character passcode, securing your device from prying eyes. Also, Microsoft has made its touch-enabled Zune pad more configurable. In addition to configuring whether touch support is enabled on the Zune pad, you can toggle list scrubbing and left and right movements specifically.

Final thoughts on the Zune devices

After initially despairing that Microsoft had neglected to update its Zune hardware in any meaningful fashion, I've come to the conclusion that its firmware updates more than make up for that decision. With the Zune 3 firmware installed, Microsoft's Zune devices are dramatically more valuable than before, and that's even truer for those who have opted to subscribe to the company's Zune Pass. Music lovers rejoice: The Zune is the place to be if you're still discovering and enjoying new music regularly. But you don't have to be an 18-to-25 year old hipster to appreciate the Zune. Loaded with the new Zune 3 firmware, Microsoft's devices are better than ever. And that's true if you're new to the platform or have been a devotee since the first 2006-era device.

All Zune 3 device models are highly recommended.