Zune HD Adds Movies and 720p Docking

Though hysteria levels may have been relatively low around the Zune HD launch today, Microsoft’s (s MSFT) new portable media players did get a couple of cool video upgrades. The Zune Marketplace software now offers movies for rental and purchase in SD and HD, and the new device also has the capability to be plugged into an “HD Dock” that you can use to show 720p video on your TV (or a hotel’s TV, for example, when you’re traveling).

Our colleague Kevin Tofel, writing at GigaOM, points out that’s better than a docked iPod’s (s AAPL) 480p output, and he also goes though many more of the specs of the device. The upside is great video quality from the OLED display — just not in direct sunlight.

Chris and I just happened to be up on our Seattle trip the day before the launch, so we got a Zune HD preview from Brian Seitz, a group marketing manager. If you want to check out the setup, here’s a video demo we filmed with him and a new Zune:

In the fall, Microsoft is adding the Zune Marketplace to the Xbox along with its big smooth streaming update, and at that point content will be shared across both platforms, and the Xbox will get the TV shows and music videos currently offered on Zune.