Zune will connect to the XBox 360 to stream music, pictures and video, it will play podcasts and will rap everything, including the music you create in DRM.
We have looked around the semi-official Microsoft blogs and recovered some interesting Zune details which may give you a better understanding of what Microsoft's device will be able to do. The main features of the Zune are pretty straight-forward, it is advertised after all as the iPod-killer, but there are some details which we were interested to discover.
First let's talk file formats, Zune will support your existing, unprotected, music library (MP3, AAC and WMA files), as well as video formats (WMV, H.264, MPEG4, 320x240), and JPG photo files. Zune will also play podcasts as long as you are able to import the file into the player's software.
Controversially, the Zune Insider blog mentions an interesting detail about Zune's DRM policy. The website uses the following quote to explain how things work: I made a song. I own it. How come, when I wirelessly send it to a girl I want to impress, the song has 3 days/3 plays? This is the reply given to the above question: There currently isn't a way to sniff out what you are sending, so we wrap it all up in DRM. We can't tell if you are sending a song from a known band or your own home recording so we default to the safety of encoding. And besides, she'll come see you three days later. . .
Leaving all that behind we also found some details on how Zune will interact with Xbox 360. The device will connect, using a USB cable, with the console and you will be able to stream music, movies and pictures. This way you will be able to view your Zune content on your TV. Once you connect you will also transfer your Microsoft Points to Zune (you need the same passport) in order to be available to use for music or other purchases on Zune marketplace.
People who own a Media Centre Edition 2005 PC will be able to access and playback music they've downloaded from Zune Marketplace on their computer. You can access this music just like you would your regular music libraries - in Media Center's My Music folder.
This is the Zune story so far, while we are still waiting for official pricing and launch date information from Microsoft.