Is Zune dying, or more important than ever?

Around this time last year, I was reviewing the Zune HD, Microsoft's last valiant effort to unseat the iPod as the dominant portable media player. This year, instead of a shiny new version of the Zune HD for the holidays, Microsoft is keeping last year's model on store shelves (though a 64GB version was added this year) and focusing its attention on Windows Phone 7. Arguably, it's the right move for Microsoft, especially considering that even Apple admits that iPod sales are on the decline while iPhone sales are skyrocketing.

But as the Zune HD hardware fades into the background, the Zune software and experience continues to evolve and gain steam. With the exception of the Zune HD's HD Radio tuner, the Zune user interface and features have all migrated to Windows Phone 7 smartphones. In fact, the Zune experience on these new phones seems to be drawing nothing but praise from reviewers.

Zune through the years (photos)

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Microsoft's Xbox 360 gaming console has also benefited from the Zune. Last year, the movie, music video, and TV show portion of the Zune Marketplace arrived on the Xbox, allowing you to purchase or rent HD videos to play on your TV and stream them instantly. This year, the Xbox has been blessed with the Zune Pass music subscription service, providing one of the slickest cloud-based, on-demand jukeboxes money can buy.

There are other, smaller, but no-less-significant Zune advancements. Bing search results now feature full-song previews--a feature Apple hasn't been able to match in spite of its acquisition of Lala. Also, you can now purchase and download MP3s directly from Zune.net, instead of installing and launching the Zune desktop software. Of course, the songs are still priced in Microsoft Points (instead of, you know--grown-up money), but a browser-based download store is another one of those conveniences that Apple has yet to match.

What does the future hold for Zune? As one of the pillars of Windows Phone 7, it's reasonable to think that the Zune experience would find it's way onto any tablets based around that OS. I also imagine that the excellent Zune software required for Zune HD and Windows Phone 7 users will eventually replace Windows Media Player as the default media program for Windows. It's a stunning piece of software, and more people deserve to see it.

So is the Zune dead? Not by a long shot. It's not the fun David and Goliath, Zune vs. iPod story it used to be, but the software and services are vital and thriving.