Microsoft is packing real muscle into its Zune HD . . . but for what?

CNet is talking up the processing muscle in Microsoft’s Zune HD, saying it’ll use “one of the most powerful chips to go into a portable media player yet.”

That’s in reference to the Nvidia Tegra, a processor that combines the basic ARM 11 core running the operating system with a GeForce graphics chip. It’s light on power consumption too, burning less than 0.5 watts.

Now, the question remains: What’ll Microsoft do with that added muscle? So far, the company hasn’t let on that the Zune HD will be anything more than a fancy audio and video player with HD Radio and HDMI output. We need to see more if Microsoft plans to give the iPod Touch a run for its money.

There are hints that it will. Michael Rayfield, general manager of Nvidia’s mobile business unit, had this to say: “We accelerate Flash, we have HD video, we do acceleration of rendering of Web pages on the GPU.”

Flash, eh? A Web-connected video player that can actually support Hulu is definitely a selling point. But there’s even more potential here with gaming.

We know that Microsoft desperately wants to tie the Zune to the Xbox brand, and plans to bring the Zune video store to Xbox Live. While passing video between a console and a handheld isn’t new — Sony does this with its Playstation 3 and PSP — no one has nailed down digitally-distributed games that work on multiple devices.

That’s where Microsoft can really shine. Imagine a console that lets you take certain Xbox Live Arcade games with you on the Zune HD when you’re away from the home console, or Xbox 360 games that can be controlled with the ZuneHD’s accelerometer. I’m not certain whether either concept would be possible, but the GeForce name implies gaming, and gaming for Microsoft implies the Xbox. It’d be a shame if the Zune HD doesn’t tie it all together.

The company has remained quiet on whether the Zune HD will have apps, and therefore games, which either means it’s a glaring omission or the company has actually managed to keep its best surprise under wraps.

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