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Will Zune HD challenge iPod Touch?

Microsoft says Zune HD is designed to go head to head with Apple's touch-screen iPod. But will its HD radio and OLED screen be enough to provide healthy competition?

Zune HD
Will Zune HD be worth buying? Microsoft

Microsoft wants its upcoming Zune HD to go head to head with the iPod Touch. Is that really plausible?

The Zune HD portable media player, announced last week, will feature an HD Radio tuner and an organic light-emitting diode (OLED) touch screen. It will use flash memory and a version of Microsoft's Internet Explorer browser. It will feature an HDMI connection for streaming video to HDTVs, Wi-Fi connectivity, HD video support, and a built-in accelerometer.

I think that Microsoft's Zune HD, if as advertised, could supply some real competition for my iPod Touch.

The iPod Touch is no slouch. It sports up to 32GB of flash memory, a beautiful touch screen, Wi-Fi connectivity, a Web browser, direct access to the iTunes Store, and much more. It's a great device, but in some respects, the Zune HD may be just a little better.

Zune advantages
Some might scoff at the Zune HD's high-definition radio. But when we consider the fact that a major selling point of the current Zune is its FM radio, it might not seem like such a bad idea to bring in HD. And having the option of listening to a high-quality transmission of songs ranging from Britney Spears to Frank Sinatra for free isn't so bad, either. Granted, you can't pick those songs, and you'll need to listen to commercials, but I think that's a small price to pay.

The Zune HD's video-out capability also could be a compelling feature. I like the idea of running HD video from the Zune HD to an HDTV. After all, why would I want to watch videos on a small display when I could watch them on a big screen? The iPod Touch's screen is nice, but it doesn't compare with my HDTV.

In addition, I think it's important that we don't discount The Social. For those who haven't spent time with a Zune, The Social is an online music community that connects Zune users. Zune owners can find other Zune owners who like similar music, explore new music by checking out what others are up to, and more. It's a neat feature that doesn't get as much attention as it should.

Touch advantages
The iPod Touch, of course, has some advantages of its own.

Apple's iTunes Store is one of the most important reasons behind the iPod's success. It offers a simple, end-to-end experience that's unparalleled in the business. And as the largest music retailer in the United States, it carries some clout.

Apple undeniably sells more iPods because of its iTunes Store. In fact, a recent survey by NPD Group contends that 87 percent of people who buy digital music in the U.S. are downloading tracks from iTunes. Although DRM-free tracks bought through iTunes can be added to the Zune HD, the Zune HD doesn't have the luxury of an extremely popular, integrated digital-music store to help it sell.

Perhaps the biggest issue with the Zune HD (and the iPod Touch's biggest advantage) is the App Store. Although it is probable that an application store is coming from Microsoft (after all, every other company seems to be doing it), one has yet to be announced. Currently, Apple's App Store has more than 35,000 applications ready to be installed on an iPod Touch. Those apps range from social networks to productivity tools to games.

Now, I should note that people can install games on the Zune HD. Granted, they're simple games, but they should count for something. In the end, though, it's Apple's App Store that easily bests anything the Zune HD could currently provide, in terms of gaming.

Another problem for Microsoft is that it's not Apple. The iPod has become synonymous with portable music devices. Whenever I get e-mails from readers about music products, I'm usually asked, "Which iPod should I get?" The Zune never comes into the discussion. That's a significant problem for Microsoft. It doesn't mean that the Zune HD can't gain considerable market share in the industry, but it does mean that Microsoft will have a tough time doing it--with or without the Zune HD.

The final verdict
There are still a lot of question marks. Zune HD pricing is currently unknown. Microsoft won't even say how big the device's hard drive will be.

It's too early to say whether the upcoming Zune HD will be just another victim of the mighty iPod, but I think that it has the potential to be the iPod Touch's most capable competitor. And there is a real chance that it can put Apple on notice. With an app store, comparable pricing to the iPod Touch, and high capacity, its chances may be good.

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