Zune HD's Xbox Live Integration Is Microsoft's Hook

If Microsoft intends Zune HD to be a real competitor to Apple and its small army of iPods and iPhones, it's going to need a better hook than HD capabilities, Wi-Fi and a sleek presentation.

What's particularly vexing is that Zune HD, which debuted Tuesday, may already have that hook: it integrates with Microsoft's hugely popular Xbox Live gaming platform. So why isn't Microsoft grabbing hold of a "Zune HD is a device for gamers as well as music geeks" mantra and hammering it with every Zune HD marketing dollar it has?

Granted, we don't really know anything about Microsoft's gaming plans for Zune HD itself. As of now, Microsoft has confirmed Zune HD integrates with the Xbox platform, and Microsoft will show off the feature at next week's Electronic Entertainment Expo (E3) in Los Angeles.

Beyond that, Microsoft has focused primarily on the device's HD capabilities and physical features: the 3.3 inch, 16:9 widescreen format OLED display with multitouch technology, as well as the other attributes Microsoft hopes will make Zune HD a serious improvement to the sputtering Zune lineup.

But here's something else we know: the niche for mobile media players that are also excellent handheld gaming devices doesn't have a top dog. It isn't Apple -- as of yet, anyway -- which despite the burgeoning popularity of gaming applications for its iPod and iPhone hasn't made the devices synonymous with "handheld gaming" the way it has with "music and media player."

Microsoft seems to get that. Enrique Rodriguez, corporate vice president of the Microsoft TV, Video and Music Business Group, said in a statement Tuesday that Microsoft intends Zune HD as an "integral part of the overall Zune experience, and we're proud to be growing and extending our offering beyond the device."

"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," Rodriguez added. Additional Microsoft sources quoted around the blogosphere Wednesday also talked up that idea of the "Zune experience."

Microsoft's Xbox 360 isn't merely a gaming platform, and Microsoft continues to expand its reach beyond gaming. In July 2008, for example, Microsoft struck a deal with Netflix to let subscribers download video to Xbox consoles, and a new Microsoft-Netflix agreement, the terms of which were disclosed last week, now allows users to play back movies as well.

Adding the Zune HD as a premium component to this expanding, Microsoft-branded universe of media options puts it at the center of the action. That seems to be the strategy, anyway, but unless Microsoft can position Zune HD as the media players for gamers, it may be downplaying the most important weapon in Zune HD's arsenal.

Apple poached Microsoft's Xbox strategy boss, Richard Teversham, in April and there were those pesky rumors that Apple will buy gaming giant Electronic Arts. Given that Apple has been flirting with a bigger plunge into gaming,the window for Microsoft to get Zune HD into the gaming limelight is very small.