Microsoft seems to be pushing ahead with software updates to the Zune HD. In an upcoming spring firmware release, the player will get support for XviD encoded videos and streaming playlists. If you have a hard drive full of XviD files (that you may or may not have gotten via BitTorrent) this is certainly good news, as you won’t have to convert them whenever you want to view them on the Zune HD. Support for the similar, but proprietary, DivX codec is unlikely.
The streaming playlists will be an extension of the Smart DJ offering already in the Zune desktop software. This will allow the device to offer playlist suggestions much like the iTunes Genius feature. Smart DJ will pack a little extra surprise, though. When the player is in range of Wi-Fi, Smart DJ can stream songs right from the Zune Marketplace without the need for local storage. Does this make the Zune HD a more appealing device in your opinion?