I'm embarassed to say that I assumed the Zune could use its Wi-Fi connection for all the usual purposes: But Engadget actually, you know, reads blogs, and found that a Zune engineer had posted a short list of what a Zune can do, and by implication what it can't. When the Zune ships, despite using standard 802.11g, it won't be able to connect to the Internet. You heard me! And it won't be able to sync with a PC wirelessly, either, only via a USB sync cable. By extension, since it can't use Wi-Fi to connect to either a network or a PC, all songs must be downloaded onto a PC and then transferred by USB to the Zune.
So this is a barely wireless player, with its only Wi-Fi features being the exchange of certain kinds of media with certain restrictions among Zune devices using ad hoc networking.
I know that the joke is that Microsoft takes until version 3.0 of any product to get it right, and 4.0 or 5.0 to make it work well, but this is somewhat ridiculous. This now guarantees that if Apple believes Wi-Fi is a worthwhile feature, we will see an iPod with a full-blown, well-implemented Wi-Fi connection before Microsoft can upgrade its firmware for Zune to do more than ad hoc.
For reference, the tiny firm MusicGremlin, was able to release their Wi-Fi music player months ago with full Wi-Fi features and a subscription-based service. Yes, you can connect to the Internet with it. Yes, you can sync wirelessly. Yes, you can exchange music with other subscribers. Its big problem at the moment is its low branding value relative to Microsoft and Apple, and its $300 cost with just 8 GB of hard disk storage. It also doesn't support WPA encryption, which makes it a non-starter for me, since that should be just a software update--and should have been included with its first release.
I think that Zune with its 30 GB hard disk and wide screen, cannot be compared to a 4:3 2" screen and 8 GB space of the MusicGremlin costing $300!!! period.
Zune has the WiFi network working for the moment in ad hoc mode. But I believe this takes only a new firmware update to add basic functionality, for limited access to the internet through Wifi and pc-synch through Wifi.
Maybe its features are limited because Zune must be out in the market before Christmas to compete with the iPod.
But since you have hardware (Wifi) installed, the software is just some months away. Should I mention Microsoft has "Windows Mobile" running on QTEK (or iMate) smartphones that are Wifi enabled ? Just an idea :)