We heard that Zune 'services' were heading to Europe this year, which was a rather suspicious turn of phrase suggesting the territory wouldn't be seeing any Micrsoft portable hardware any time soon.

Microsoft has just revealed its immediate strategy regarding the rebirth of its multimedia device, which, for the UK, currently only spells a rebranding and expansion of Xbox Live video services.

“The Zune experience is growing beyond a music player in the U.S. Zune’s international expansion starts with video on Xbox LIVE; eventually we’ll offer the full digital entertainment experience spanning screens, devices, platforms and geographies,” says Chris Stephenson, general manager of consumer marketing for the TV, video and music business.

“Delivering on Microsoft’s connected entertainment vision; this news marks a turning point for Zune as it brings cross-platform experiences and premium video content to living rooms around the world.”

The US will see the launch of the ZuneHD this Autumn, which will include an HD radio receiver, HD video output, an OLED touchscreen, wi-fi and an internet browser. It also sounds as though the device will be compatible with the Xbox Live video service, allowing users to view their streamed, rented or purchased video content on the go.

Microsoft also promises that attendees at E3 will see how ZuneHD "integrates into Xbox LIVE to create a game-changing entertainment experience," suggesting the device is to be positioned as a strong contender to the iPod touch after all.