In a somewhat inconspicuous update Microsoft has revealed that the Zune HD will receive a firmware update adding native support for the MPEG-4 Part 2 ASP codec, including the long-awaited format of choice for many netizens, XviD video support. Microsoft has assured that files in this format should play both on the Zune HD itself, as well as when sent out to an external TV display via the HD’s AV Dock.
The update will also address a long-standing criticism about a feature gap between the Zune HD and its PC client-based software– Smart DJ playlists will also be added onto the player itself, currently only available in the Zune’s PC software. This would finally make the Zune HD’s playlist feature a contender with the on-the-fly Genius playlist capabilities of the iPod Touch.
Even better, Zune Pass users connected to wireless internet will be able to to create Smart DJ playlists that incorporate streamed content from the Zune Marketplace, besides the songs already stored on the player. I'm not a Zune HD owner at the moment, but this prospective firmware update coming Spring is slowly becoming a strong reason for me to look for a Zune HD to play with.