When I reviewed the Zune HD portable media player a few months ago, I was impressed with the user interface and overall audio and video playback performance. But I was a bit disappointed with the limited video codec support. Now Microsoft is doing that. Engadget and Gizmodo are both reporting that Microsoft will offer updated software within the next few weeks that, among other things, will add support for Xvid and other MPEG-4 codecs that had not previously been supported — but not DivX.
Another new feature is support for Smart DJ playlists. Currently, Smart DJ can create instant playlists based on criteria you select — but only using the Zune desktop software. The Zune HD 4.5 firmware update will let you use SmartDJ on a device.