Yesterday, Microsoft officially announced the rumored Zune HD, which will ship this fall in US. Though the name of the new device suggests high definition video its 3.3-inch OLED touchscreen will only have 480 x 272 resolution. However, Zune HD will be capable of 720p video output via a new dock featuring HDMI port for use with HDTVs.

The feature that Microsoft believes will separate Zune HD from other devices on the market is HD Radio. Zune HD will be the first PMP that will combine HD radio receiver, OLED touchscreen, WiFi and Internet browser. Like its main competitor iPod touch, Zune HD will also feature multitouch functionality, but it will lack the main feature that makes iPod touch a great device – the App Store. Microsoft promises that they will have series of games available for Zune HD when it is launched, but the company won’t focus on other type of applications for the device.

It is believed that Apple will also update iPod touch in September. We have to wait and see what new features Apple adds to the device. It will be interesting to see how the two devices compete during the holiday season.

Along with Zune HD, Microsoft also announced that it would rebrand the Xbox LIVE Video Market as Zune Market. Microsoft will demo the updated Xbox interface highlighting Zune market at Electronic Entertainment Expo (E3) next week.
[Via Zune]