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Zune, Microsoft Corp.’s end-to-end digital entertainment service and media player, today announced significant advancements for consumers. The new Zune HD touch-screen media player is now available at retail, and a powerful update to the Zune PC software is free for download. For the first time, standard- and high-definition (HD) movies can be purchased or rented¹ through the Zune Marketplace online store, and a new streaming music service on Zune.net lets Zune Pass subscribers listen to music from a Web browser. The updates to the Zune hardware, software and online services released today, combined with a new Zune video offering on Xbox LIVE coming later this fall, bring customers instant access to their favorite music and videos anywhere,² across their mobile device, PC and TV.

“With today’s announcement, the Zune business is growing into a comprehensive entertainment service that’s no longer tied to any one screen or device,” said Enrique Rodriguez, corporate vice president of the TV, Video and Music Business at Microsoft. “Zune lets consumers connect to their music, TV shows and movie content and enjoy it on the three screens they use every day.”

Zune HD: Next-Generation Digital Entertainment

Zune HD marks a significant step forward for portable media players, combining powerful hardware components such as an organic light-emitting diode (OLED) multitouch screen, an NVIDIA Tegra HD processor and HD Radio capabilities with software advancements such as the new Quickplay menu, a well-featured Web browser, and engaging music and video playback features to deliver a new portable listening and viewing experience. Quickplay is a new signature menu for Zune, putting customers one touch away from the content they love, such as favorites, last played items and media most recently added, eliminating the need to dig through menus to find the music, videos, pictures or podcasts they want.

With Zune HD, consumers now have the ability to store and play back 720p HD video files to an HDTV using the new Zune HD AV dock accessory. Consumers can buy or rent HD content from the Zune Marketplace, sync that content to a Zune HD device, and take it with them to play back on a large-screen HDTV in the home or on the road.

Every Zune device currently includes a built-in FM tuner, and now the Zune HD device offers the first portable HD Radio receiver on a Wi-Fi-enabled device. With HD Radio, listeners experience crystal-clear sound on more than 2,000 stations in the U.S. and have access to more than 1,000 stations that simulcast content in a variety of formats, from adult contemporary to news talk. Zune HD users can also tag songs they hear on supported HD Radio stations for purchase immediately if in a Wi-Fi hot spot, or complete the purchase later when using the Zune PC software.

Zune HD also features new casual games and non-gaming functionality such as a calculator and an MSN Weather application. Later this year, Zune plans to release free applications such as Twitter for Zune and Facebook for Zune, in addition to fun 3-D games such as “Project Gotham Racing: Ferrari Edition,” “Vans Sk8: Pool Service” and “Audiosurf™ Tilt.” Games can be added to Zune HD via Zune Marketplace over the Wi-Fi connection or when connected to the Zune PC software.

Zune HD is available from major retailers with a black 16GB version for $219.99 (estimated retail price) and a platinum 32GB version for $289.99 (ERP). Additional red, green and blue devices are available in both capacities from Zune Originals ( http://www.zuneoriginals.net ), where customers can also customize the back of the Zune HD device with art and text etchings to create a unique Zune.

“Our research indicates that there’s strong consumer demand for dedicated media players and Zune HD offers visible differentiation in this market,” said Michael Gartenberg, vice president of strategy and analysis at Interpret LLC. “Microsoft is also offering some compelling software and services with the Zune ecosystem that will help Zune HD stand out from other offerings.”

Greater Access to and Control of Music and Videos

Zune is also refreshing its free Zune PC software with new discovery and recommendation features, such as Quickplay and Smart DJ, that help users find and play digital content. The Quickplay menu available on the device is also featured on the PC software, allowing favorite content to be displayed along with most recently played and added music, video and podcast content.

The new Smart DJ feature showcases the power of the Zune software and services by creating endless playlists using any artist, album or song as the starting point. For Zune Pass subscribers, Smart DJ will queue song recommendations from both the customer’s collection and from more than 6 million tracks in the Zune Marketplace. Nonsubscribers will get Smart DJ recommendations from the user’s music collection. Movies make their way into the Zune PC software this fall for rental and purchase. Users can watch movies in the Zune PC software with a full-screen viewing mode or sync them to Zune HD for viewing on the go. Many titles are available in HD and standard definition, with additional titles making their way into the catalog in coming months.

Streaming Music, On Demand

Now as Zune Pass subscribers, not only can customers enjoy access to close to 6 million songs from the Zune Marketplace catalog for $14.99, the price of one CD a month, but they can also log into Zune.net and stream full albums and tracks through a computer’s browser. Customers will also find the Smart DJ feature on artist pages in Zune.net, which means they are one click away from starting an endless playlist to keep them rocking through the day.

The Zune Service Extends Across Microsoft Platforms

Later this fall, Zune video will expand to nearly 20 million Xbox LIVE users, combining the Zune and Xbox video stores so consumers have access to more content provided by Zune. With unified video catalogs on Zune and Xbox LIVE, customers will have the ability to play purchased movies and TV shows across Xbox, the PC and Zune HD. Zune will also be introducing new technology enhancements in Xbox LIVE, providing a choice to download or instantly stream HD video in full 1080p with 5.1 surround sound.

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Zune HD, the next generation of Microsoft Corp.’s portable digital media player, is available now for pre-order and is set to hit store shelves on Sept. 15. The player, available in 16GB and 32GB capacities, is the first touch-screen Zune and includes powerful playback technology to give you a different way to experience media on the go. Combined with unparalleled PC software and online services such as Zune Pass, Zune provides a rich and meaningful connection to music, videos, podcasts and more.

Pre-order Zune HD in 16GB Black and 32GB Platinum through http://www.zune.net/zunehd from Amazon.com, Best Buy, Walmart and Microsoft. Beginning Sept. 15, at http://www.ZuneOriginals.net, both 16GB and 32GB capacities of Zune HD will be available in five different colors with the option to customize your player with one of 10 new engravings designed by guest artists.

WHAT: With a sleek and stylish design, Zune HD is the first to combine these features:

· Built-in HD Radio™ receiver. Allows you to listen to higher-quality sound than is available from traditional radio channels, as well as access additional programming through HD2 and HD3 multicast channels from many of your favorite local FM radio stations at no extra cost.

· HD video output capabilities. Supports HD video playback from the device through a premium HDMI A/V docking station (sold separately) directly to an HDTV in 720p, making it easy to enjoy better-than-DVD-quality video on your own big screen at home.

· OLED touch screen. Allows you to easily flip through music, movies and other content. The 3.3-inch glass screen and 16:9 widescreen format display (480×272 resolution) offer a premium viewing experience.

· Built-in Wi-Fi. Allows for browsing, streaming or downloading new music from Zune Marketplace.

· Internet browser. Full-screen Web browsing, optimized for the multitouch screen with zoom-in and zoom-out gestures.

· Accessories, at home and on the road. Zune HD and AV Dock charges and syncs players while playing supported 720p HD videos on HDTVs. Play HD Radio, music and podcasts from your Zune HD device through your car stereo using the Zune Premium Car Pack.

WHY: Pre-order now to be one of the first to experience the new Zune HD’s advanced design, innovative technology and rich multimedia capabilities powered by the NVIDIA Tegra™ chip ultralow-power HD processor.

PRICING: Zune HD 16GB: $219.99 (estimated retail price); Zune HD 32GB: $289.99 (estimated retail price)

WHEN: Pre-order starting Thursday, Aug. 13. Purchase in stores on Tuesday, Sept. 15.

WHERE ONLINE: http://www.zune.net/zunehd

WHERE IN STORE: Place a pre-order in person at Best Buy beginning Aug. 16. If you want a sneak peek, visit select stores in Atlanta, Boston, Chicago, Dallas, Houston, Miami, Minneapolis/St. Paul, New York, Los Angeles, Philadelphia, San Francisco, Seattle and Washington, D.C. areas on Aug. 22 and 23.

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Last week Microsoft released its latest update to the Zune software. Version 3.1 brings us Checkers, Space Battle, and that extremely addicting game Sudoku. Along with the update to the games list, came some behind the scenes work to help fix reliability of the Zune software. This update came as a surprise as the 3.0 update had only just come out two months before, and so far the updates to the software have been separated by months at a time. Along with the update to the software came an update to the Zune Pass. Now along with your unlimited access to the Zune library, you also receive a monthly credit for ten free songs. On the official blog for the Zune, Cesar Menendez from Microsoft lists some answers to some common questions about the ten free songs, but as you read this you quickly learn that as can be expected there is a catch. There is no rollover, so you better make sure to use all ten credits as soon as you can, because they also don’t tell you exactly when your ten credits will refresh monthly. The blog post also states that almost 90% of the Marketplace Library is in MP3 format, which is nowhere near the truth, as of a week after the update only about two-thirds of the library is in MP3 format, and most of the more mainstream music is still in WMA. While I think there is some fine tuning that needs to be done to this deal I do think this is definitely a major improvement for the Zune pass.

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