(reprinted from ZuneSphere.com) We’re nearing the third anniversary of the Zune (ok.. we’re about two months) so if you’re Microsoft, what do you do? Keep them coming of course! Unlike the last two years, you won’t see any new hardware designs for the Zune this year. Instead, Microsoft decided to release new storage capacities for the Zune and also update the firmware and Zune software application.

Let’s first cover the hardware changes which really are not changes as much as additions. There’s a new hard drive based Zune out – the new Zune 120GB model or Zune 120 for short.  On the flash front, Microsoft upped the storage amounts to 16GB there – no real surprise there of course given that iPod touch devices are already available in 16GB models. I must say it’s slightly disappointing that Microsoft didn’t announce new hardware changes to the Zune to compete more effectively against the iPod touch.. but then again, the software changes are indeed nice.

Ah yes.. the software changes. This is certainly where things get exciting. First off, Microsoft has finally unleashed more capabilities to the built-in Wi-Fi support on the Zune. In the first iteration of the Zune, we saw the notion of being able to share music between Zune devices. Cute.. neat.. but somewhat useless considering I had to travel a tens of MILES to find the next Zune user! In the second iteration, Microsoft finally allowed for wireless syncing of the Zune. Another cool feature.. useful at times too.. but in practice, I never really used it.  Now, in the third iteration of the software, Microsoft finally allows for wireless downloads of music straight to the Zune via the Zune Marketplace. Finally – a truly useful feature of the Wi-Fi connectivity support on the Zune. What makes this even sweeter is the notion that with a Zune Pass subscription, you could easily listen to millions of songs on demand straight from the marketplace anytime you’re near a Wi-Fi hotspot. This is truly where an all-you-can-eat subscription makes a lot of sense. Sure it’s not free like Pandora.. but at least 1) you won’t have to worry about whether the service will stay alive or not and 2) you get access to WAY more titles!

Now to make this all possible, your Zune will now be able to connect to thousands of Wi-Fi hotspots (w00t!). Unfortunately, since the Zune does not have a built-in web browser, you won’t be able to connect to hotspots that required browser logins.

As for navigating the Zune marketplace on the Zune, users will be able to browse lists of featured new releases, top songs and albums sorted by genre, or use the on-screen keyboard to type a song title.

If you’re a big user of the built-in FM receiver on the Zune, then you’ll probably appreciate the new “Buy from FM” feature being introduced with the third iteration of the Zune software. Buy from FM lets customers tag and purchase songs they hear on the radio directly from their Zune device. If the user is near a Wi-Fi hotspot, they can purchase and directly download the track. If they’re not near a Wi-Fi hotspot, the track gets queued for download when the user either connects to their PC or connects to a Wi-Fi hotspot later on. I’m not a big user of the built-in FM radio myself.. but this might change things finally. There are certainly many many instances where I find myself saying “Gee.. who’s this person I’m listening to?”

Think that’s it? Nope.. there’s more folks. Microsoft also announced a new “Channels” feature on the Zune software. You can view and listen to expert-created channels or you can have the Zune software create custom channels for each user based on their favorite artists and genres. If you want to listen to the expert channels, you’ll need a Zune Pass subscription to get at everything – or you can purchase songs one at a time in an a la carte fashion if you don’t have the pass.

There’s also the “Personal Picks” feature which is basically a new recommendations system for users. When you log into the Zune Marketplace, you’ll find a new “Picks” area where suggested artists, albums, and tracks will appear. This is all done via a new Zune recommendation algorithm that uses information from the Zune Social.

Speaking of Zune Social, the online music community now gets a bit more powerful thanks to the Zune Card. Previously, you could see what your friends were listening to on the Zune Social – now you can take there tracks with you on the go via the Zune Card. A Zune Card is a real-time playlist of each user’s favorite and recently played tracks. The card can be accessed from the web or within the Zune software application or synced to the Zune device. Playlists will even automatically update when the Zune connects to a wireless hotspot – very cool. Overall – this is certainly a very neat feature on the Zune. You can finally listen to what your friends are listening to – assuming of course you can get your friends to use the Zune instead of some other competing music player! (more reasons to do so now!)

Two other new features on the Zune software are:

• Mixview. Customers can select an artist, album or Zune Card to activate a dynamic, visual mosaic of related music and listeners. With each click users can take the view in a new direction, creating a fun, graphical way to discover new music. Mixview works with users’ current collection of music, in addition to tracks and albums from across the Zune Marketplace.
• Now Playing. The improved Now Playing view is more interactive and cinematic. Users can sit back and enjoy the combination of great artist imagery, colorful effects, bio information and data from the Zune online music community, all combined in a full-screen view. They can also click to dive deeper into the music behind the picture, providing another great way to interact with their collection.

Finally, on the firmware front, other small but notable features on the Zune include:

• Two free games for the Zune – Hexic and Texas Hold ‘Em. Yes.. games on the Zune are indeed real
• Support for audiobooks finally!
• Support for audible!
• Support for OverDrive

So.. what’s the catch in all of this? Nothing folks. The great part about the Zune experience for existing Zune users is the fact that EVERYONE with a Zune will get these new features for free!! So if you have an original Zune 30 – not a problem – go ahead and update the firmware next week. If you have a Zune 80 – not a problem too! There are no fees to pay, no software to buy.. just upgrade (pray a little), and go! 

Finally, the current pricing plans are as follows:

• 120GB Zune – $249.99
• 80GB Zune – $229.99
• 16GB Zune – $199.00
• 8GB Zune – $149.99
• 4GB Zune – $129.99

It’s certainly nice to see the Zune team continuing to advance the Zune on the feature and software front. Though it would have been nice to see new hardware models aside from storage upgrades, the mere fact that these new software updates are made available to ALL Zune users is certainly something Microsoft can be proud of.

[Check it out via ZunesSphere]

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