We don't know exactly what's going on, but both Xbox Live and Zune Marketplace are apparently acting up right now -- we've gotten reports that the entire Zune user database is more or less MIA, while Xbox Live seems unable to process purchases reliably. If we had to guess, we'd say that Microsoft's free Thriller video giveaway is causing some pretty massive server strain, but that's just a shot in the dark. Keep us posted on how you're doing, and we'll let you know if we hear anything official.

[Thanks to everyone who sent this in]

Microsoft is busy announcing a slew of upgrades to Xbox Live, and the biggest news so far is relaunch of the video service, now Zune-branded with 1080p instant-on streaming content in 18 countries. XBL is also now integrated with Facebook -- your Facebook account can be linked to your Gamertag, and games will support Facebook Connect for sharing content online. That's pretty huge -- but if that wasn't enough, you're also getting Twitter and Last.fm in the deal. Want more? Netflix users will now be able to browse the entire catalog instead of simply loading their queue, and Microsoft has also gotten its Party Watch system in order, so you'll be able to heckle videos with your online friends. Last but not least, there's now live TV streaming for UK and Ireland gamers, who'll get Premier League soccer live from Sky. All in all, a solid set of updates for XBL -- but we'll wait and see how that "1080p" video looks before we pronounce Blu-ray dead. PR blurb after the break.

Entelligence is a column by technology strategist and author Michael Gartenberg, a man whose desire for a delicious cup of coffee and a quality New York bagel is dwarfed only by his passion for tech. In these articles, he'll explore where our industry is and where it's going -- on both micro and macro levels -- with the unique wit and insight only he can provide.

A lot's been made of the new Zune commercial that Microsoft aired recently. If you have haven't seen it, take a look. Now don't get me wrong. I think there's a lot that Microsoft can do with Zune, but this ad doesn't quite do it for me. What's wrong? First, it took a shot at Apple that felt silly -- after all, most consumers don't spend $30,000 to fill up their iPod (how much did it cost to fill yours?). Even if that's the case, buying a Zune Pass won't fill up an iPod either. Second, it started to make a value play that's real, but stopped short of actually making it.

The ad was interesting as it begins the discussion of the value of the Zune Pass. That's important. The power of the Zune Pass lies at the core of the differentiation of their whole business model, subscription services vs. single song downloads. Microsoft needs to go further and explain how these two models can co-exist with each other. Up until now there were only two models for music, the free and ad supported stuff on radio, or music you bought or owned (or perhaps acquired elsewhere). Zune Pass and other similar services change all that. While consumers "rent" video content all the time from theaters, cable companies, Netflix etc, there's also a lot of other stuff sold on DVD. There's no reason for this to be binary -- rent or buy -- it's just never been applied to music and when it has, it's not been explained or marketed well at all.

While we broke the news of the ZuneHD to the world as we did the original, we have no way to verify the authenticity of this new image originating at Windows Mobile Power User and now trotting itself around the Intersphere fueled by the adrenaline of fanboy fantasies. We've been skeptically going over it pixel-by-pixel (what is that on the back? A camera, a screw-hole?) as this is the notorious period that always follows a product leak when dubious PhotoShops and fanart begins flooding our tips box. Fortunately, Zunited's sources have stepped up with an assertion that the pic is in fact an authentic ZuneHD. So let's turn an eye to the specs, the glorious, almost absurdly high-end specs that accompany the picture. Zunited's sources won't touch these and we're keeping them at arm's length for now under the it's too-good-to-be-true heading. Click through to see what we mean.

[Via Zunited]

It's an annual tradition, don't you know? Winter rolls around, the fires get going, the cocoa gets to cookin', and we get to thinking that the Zune and Xbox 360 just have to have some tighter integration in the not-too-distant future. This go 'round, we've got a suspicious job posting over at Microsoft that's stirring up a little speculation, and for good reason. In fact, the listing -- which seeks a particular User Experience Designer -- specifically mentions that the perfect candidate will be comfortable working closely with "creative directors to propose innovative designs and content solutions for the Zune Device UI, Zune Xbox and Zune PC Application." In case that wasn't definitive enough for you, it also mentions "embracing and extending" the Zune brand. Oh, and on another note, are any of you applying? Sounds like a pretty sweet gig.

[Via CNET]

There's just nothing like the holiday season, folks. That warm, fuzzy feeling you get when spending your last dollar on a gift for someone you aren't even that fond of -- really, what else can compare? On second thought, maybe this can. Microsoft has just announced that, beginning today, Zune Pass users will be able to select ten tracks per month to keep forever (and ever, and ever), and the $14.99 monthly subscription rate isn't headed up. Agreements have been miraculously nailed down between Microsoft and EMI Music, Sony BMG Music, Universal Music Group and Warner Music Group, not to mention a number of independent distributors. We must say, we certainly appreciate the gesture here, but is it enough to make fencesitters buy in? What say you?

Simmer down folks -- everything is going to be a-okay. Yes, 'tis true -- Microsoft has indeed scheduled for Xbox Live service maintenance and Zune service tweakage to take place at the exact same time this coming Monday, but it's probably not worth losing your mind over. In fact, Major Nelson goes out of his way to affirm that "when [Xbox Live] service returns, you will not have any new features and you will not have the new Xbox experience update." Point being, your Zune Social, Zune.net forums, all of the Zune Marketplace and Xbox Live services will be offline for up to 24 hours (48 hours for the Zune suite) starting at 12:01 PST on September 29th, but don't expect a Zunephone to pop out of your now-forgotten HD DVD add-on when things come back on. Or you can, but we'd be prepared for unprecedented disappointment.

[Thanks to everyone who sent this in]

Read - Xbox Live down time
Read - Zune services down time

After a couple misstarts, we've finally got Zune 3.0 running on our computer and that shiny new blue Zune 8 we nabbed yesterday. We had problems with the straight installer, but updating from within Zune 2.5 worked quite well, and after a restart we were able to perform the same feat on the player. The software choked up on the first sync, but we canceled out and it twasn't a problem.

With 3.0 all ready to go, we wasted little time jumping onto Marketplace wirelessly, which felt especially delicious on a teensy little flash DAP. Naturally, we could've squandered all our Microsoft Points on song buys -- which are quite easy to accomplish, with a cart-based purchasing system -- but we're all about subscription music, and Zune Pass speaks our language. The browsing, selecting and downloading processing couldn't be much easier, and you can pick a song to play from right in the store while browsing other wares. There were a couple hiccups in playback when switching tasks, but they were always brief.

Seeing how long it took the Zune to make it over the northern border and into Canada, it shouldn't be any surprise that it's going to take even longer to get to Europe -- not until late next year, according to the director of Microsoft France. The wait should be worth it, though: that's when the third generation of Zunes will be released, as well as a Europe-friendly version of the Zune Marketplace. There are also some sketchy rumors that Windows Mobile 7 devices will be able to take advantage of Zune content and services, but it doesn't look like Microsoft has anything to say about that yet -- but if that goes down you know a Zune phone is right around the corner.

[Via Anything But iPod]

We're nearly nauseous from all the spinning on the Xbox Live carousel. One minute we're in, the next we're out. Now, Microsoft is confirming that the issues are back via Xbox.com, and as if that weren't enough in and of itself, the outfit is also informing Zune owners that they "may experience intermittent issues logging onto Zune Marketplace." From what we can tell, there's no definitive ETA on a resolution that will actually stick for more than ten minutes, but if we were you, we'd lock down that Hotmail account, pronto.

[Thanks, Robert S. and everyone who sent this in]
Read - Xbox.com Support
Read - Zune.net Support

As we noted in our Zune launch post, with the new Zune announcements, Microsoft intends to do more than just launch hardware. The Zune crew has apparently done a complete overhaul of the Zune desktop software so it's no longer just a weak rebadge of Windows Media Player 10 (praise the heavens), which Microsoft hopes will help the social to get more, um, social-er, with a number of things to attempting better engage music listeners and Zune customers:

• The Zune Marketplace is officially adding DRM-free music support, launching with over a million DRM-free MP3 tracks. As we mentioned earlier, other details (like which labels, whether there is a DRM-free upgrade path is for users who've bought music with DRM, price differences, etc.) are not yet known.
• Zune Marketplace is also getting podcasts and music videos. (Great, but where's the real video content?)
• Microsoft is also launching Zune Social, a free online music community / social network (great, another social network!) which allows users to create...
• Zune Cards, which are web widgets not unlike Xbox's Gamer Cards. Zune Cards let other users track your most played and recently played music (updated each time you sync back to your host machine). Users can also sample music directly from someone's Zune Card.
• You can now share with others music that was shared with you.
• No, the Zune still doesn't analyze the tracks it shares, so Zune Pass unlimited customers still can't share music without DRM.
• But, at very least the Zune's 3x3 DRM no longer has a time limit. Same three play restriction, but it no longer has to be within three days.

A tenacious Zune user has recently stumbled across some potentially eyebrow-raising information while dipping into the device's desktop software files. It seems that embedded in an innocent looking ZuneMarketPlace.dll file is some internal code that suggests a new content partnership with MTV, VH1, and CMT for the Zune Marketplace. We know that Zune software has its roots in Windows Media Player, and Microsoft and MTV are pretty tight with their Urge integration in WMP11 -- but that doesn't necessarily mean this is holdover code. The found strings are very specific about mentioning "VH1 on Zune" and the like, so that's clearly cause for speculation. Too bad they didn't find anything about Lionsgate or some other movie studios though, this thing is way overdue for some video content.

Even before the Zune came out we heard that while the software wouldn't sync to other players (and the player to other software), the DRM the Marketplace used was basically compatible with PlaysForSure. Although we haven't seen anyone try and document the process, Zune Pass user AIZEE showed off a couple of screencaps successfully loading DRMed tracks onto his Creative Zen with Creative Media Explorer. We didn't verify the process and thus can't guarantee Zune Pass tracks will work on the portable of your choosing, but again, we're not too shocked that somebody could get their Zune music to authorize on another device. Somebody call us when someone gets the Zune itself to sync with Napster or Rhapsody, ok?

Today, Sonos announced a software update for its music setups, which will allow users to listen to Microsoft DRM-encoded music. Version 2.1 includes tracks purchased from AOL Music Now, URGE, Napster, Wal-Mart, Yahoo! Music Unlimited, Zune Marketplace and adds "improved playlist and volume normalization support" for iTunes 7.0. It also brings full compatibility with Windows Vista and Windows Media Player 11. So for the small group of you out there who have all your music constrained by Microsoft DRM and wished you could buy a Sonos system, Christmas has come very early for you.

When it comes to the hardware, we're pretty much set; we all now know the Zune inside and out. But how it interacts with the software, the marketplace, etc. -- that's where the magic happens. Or doesn't. We really wanted to give the Zune the benefit of the doubt. We hoped installing the Zune software and getting our player running would be as seamless and painless as getting iTunes and an iPod running on your machine, since that is, after all, what it's up against. (Granted, not even iTunes is bereft of major problems on major releases.) Unfortunately, the reality of our experience with the first version of the Zune software this afternoon is much like that of many version 1 software experiences. It sucks. Read on to see what happened.