Zune 3.0: Microsoft's iPod Killer?

As much as Microsoft(MSFT Quote) would love to think it could make up ground in the portable music player market, Apple's(AAPL Quote) iPod still rules the roost -- and probably will for a long time.

But a few days ago, Microsoft released two new Zune music players as well as an upgraded version of both the player and computer software. The result is more available storage on the devices and more features for the software.

Zune vs. iPod

The flash-based Zune players now come in 16GB ($199.99) as well as 4GB ($129.99) and 8GB ($149.99) while the newest hard-drive-based Zune comes with 120GB ($249.99) of storage and complements the 80GB ($229.99) model. The two new models sport sleek black-metal back covers.

Microsoft Zune Music Players

The new software is definitely an improvement over the original and last year's update. It puts your computer music library right on the front page where you can see everything in a glance. It also recognizes all the MP3s you've purchased from Amazon.com and iTune, and accesses all the metadata (titles, artists, genres) for each song.

Zune vs. iPod

The new software also puts Microsoft's new Zune Marketplace front and center. As you might expect, the Zune store offers songs, videos, podcasts, audio books and TV shows for sale. You can download titles one at a time or spend $14.99-per-month for an "all-you-can-eat" Zune Pass with access to all Zune store content. Millions of songs and videos are available according to the Marketplace Web site.

Zunes differ from iPods in a number of ways. The biggest hardware difference is that Zunes have built-in Wi-Fi. You used to be able to share songs with other friends owning Zunes. Now, the new software allows you to download content directly from the Zune Marketplace to your Zune music player.