We're now a few days into the Zune HD (read Part 1 here) and we're more sure of this than ever: It is not gunning for the iPod Touch. It is not a PDA. It is not a smartphone with the radio yanked out.

It is, however, a kick-arse MP3 player, with potential on the software side for much more.

Watch our brief hands-on video above, and join us after the break for a look at what Microsoft got right, and what leaves us wanting.

This is not a smartphone-lite

A reminder that we're looking at the Zune HD from the Windows Mobile perspective in hopes of getting a glimpse at what we may see in a future operating system. But first, a few major items that are missing from the Zune that keep it far from the smartphone category:

  • E-mail client: Nowhere to be found.
  • Contact manager: Nope.
  • GPS: Can't find it.
  • Bluetooth: Nada.
  • Apps: OK, there are nine right now, all developed by Microsoft (and sporting pre-roll advertising). Microsoft has opened things up a little, in the XNA-framework.
  • Phone radio: Yeah, kinda important.

So, yeah. This is an MP3 player with a killer user interface.

What we're not crazy about

Look, people are griping about the lack of apps currently available for the Zune HD. And we feel their pain (but are enjoying Texas Hold 'Em). We're more concerned about load time. Ten to 15 seconds to load an app is not good, especially given the Tegra processor. But we'd expect things to get better in the coming months.

The browser, based on mobile IE6, is functional, but not great. The keyboard isn't terrible and will get better with use. But pages are slow to load.

While syncing media is easy to do (more on that in a minute), podcasts can only be moved to the device via the desktop software. That's no good. We need to be able to do so via WiFi, just like other media on the device.

Oh, and speaking of podcasts, you can subscribe to the WMExperts Podcast with the Zune software by clicking this link. (We're still working on getting added to the Marketplace — feel free to suggest us!)

What's done right

First and foremost: The operating system is smooth as butter. We're that impressed with it. If this isn't what Windows Mobile 7 looks like — no taskbars, seamless transitions — we're going to be very, very disappointed in you, Microsoft.

Media playback is as it should be as well. There's no sign of the usual Windows Media Player clunkiness. It just works.

Marketplace integration is very good. It's artsy, and the music and selections aren't bad at all. Transferring material over WiFi isn't the quickest, though that's that be expected. But that leads us to ...

The desktop software is top-notch, as it has been for the Zune for some time now. Again, none of the usual headaches we're used to with ActiveSync. It just works.

These are the biggest things we hope to see make the leap to Windows Mobile in the next year or so.

And not to be forgotten is the hardware quality. It's as good as any Windows phone we've had, and we're excited about (and here we are starting this flame war again) getting to use capacitive screens, finally. And the OLED is to be written home about.

The bottom line

The Zune HD isn't a phone. It isn't a PDA. And it's not trying to be either. But it is a killer MP3 player with a killer UI, and we're chomping at the bit to get it and the multimedia playback in Windows Mobile.

It's time, Microsoft.