Rumors have been floating around concerning a next-generation Zune for quite some time, and Microsoft has today made all our "dreams" come true with the official announcement of Zune HD and the extension of Zune services to Xbox Live.

The Zune HD, while not exactly an iPhone, will attempt to cater to all your portable media needs, with a built-in HD radio receiver, HD video capabilities and an organic light-emitting diode (OLED) touch screen. An Internet browser and Wi-Fi functionality will of course be part of package, but that should go without saying. No mention of games thus far.

As previously mentioned, Zune will have a premier place on the Xbox Live Marketplace, bringing a fresh new library of TV and film content. Microsoft will be demonstrating the Zune's partnership with Xbox Live at E3, so by the end of next week we should see how it all works. 

There you go, ladies and gentlemen. It is the Zune HD. Will you be chucking your iPhones in the trash for this little number?

REDMOND, Wash. — May 26, 2009 — Microsoft Corp. today announced the evolution of Zune, the company’s end-to-end music and entertainment service, to a new platform and new markets. Zune will extend its video service to Xbox LIVE internationally this fall. This marks an important development in the Zune strategy and brings the Zune brand to more than 17 million international Xbox LIVE subscribers. In addition, Microsoft confirmed the next generation of the Zune portable media player, Zune HD. Available in the U.S. this fall, Zune HD is the first portable media player that combines a built-in HD Radio receiver, high-definition (HD) video output capabilities, organic light-emitting diode (OLED) touch screen, Wi-Fi and an Internet browser.

“The Zune music player is an integral part of the overall Zune experience, and we’re proud to be growing and extending our offering beyond the device,” said Enrique Rodriguez, corporate vice president of the Microsoft TV, Video and Music Business Group. “Delivering on Microsoft’s connected entertainment vision, this news marks a turning point for Zune as it brings cross-platform experiences and premium video content to living rooms around the world.”

Zune Service Expands to New Platform

Zune will be a premium partner in the Xbox LIVE Video Marketplace, bringing an exciting catalog of TV and film to the platform. Zune will occupy the first slot within the Xbox user interface in the Xbox LIVE Video Marketplace, exposing the Zune brand experience to millions of new consumers for the first time. At the Electronic Entertainment Expo (E3) next week, attendees will see firsthand how Zune integrates into Xbox LIVE to create a game-changing entertainment experience.

Introducing Zune HD

Zune HD is the next iteration of the Zune device family and brings a new level of listening and viewing experiences to the portable media player category.

·         Zune HD comes with a built-in HD Radio receiver so users can listen to higher-quality sound than traditional radio on the go. Users also will have access to the additional song and artist data broadcast by HD Radio stations as well as additional channels from their favorite stations multicasting in HD. If you don’t like the song playing on your station’s HD channel, switch to its HD2 or HD3 channels for additional programming.

·         The bright OLED touch screen interface allows users to flip through music, movies and other content with ease, and the 16:9 widescreen format display (480x272 resolution) offers a premium viewing experience on the go.

·         The HD-compatible output lets Zune HD customers playback supported HD video files from the device through a premium high-definition multimedia interface (HDMI) audiovisual docking station (sold separately) direct to an HD TV in 720p.*

·         Zune HD will include a full-screen Internet browser optimized for multitouch functionality.

·         Zune HD is Wi-Fi enabled, allowing for instant streaming to the device from the more than 5 million-track Zune music store.