DEAR STEVE (BALLMER) AND BILL (GATES):

Enclosed please find the Zune HD player and accessories you kindly sent for review. While there are some things I like a lot about this nifty little portable multimedia player, features that really set it apart from the competition, I'm not ready to write you a check to hold onto it.

Some shortcomings and quirks popped up in my test that I think your team needs to address - quickly - if you have a ghost of a chance of making this product fly.

UNDERDOG: For starters, ya gotta admit it's ironic that this third-generation Zune audio/video portable player is (still) being positioned as an edgy, "underdog" product. Microsoft is rarely in that position.

But when it comes to small, lightweight media portables, the world hardly ever thinks of anything but Apple, Apple and more Apple. (OK, maybe a little SanDisk, Sony and Samsung, but not much.) iPods and iPhones don't just rule this market, they strangle the competition.

Kudos, then, to the Zune design team for coming up with such a sleek, handsome-looking device, with a black-and-aluminum-toned case that's slimmer and lighter than the iPod Touch, the Apple product you guys are definitely gunning for.

And at $220 for the 16-gigabyte and $290 for the 32-gigabyte model, it's competitively priced, too.

SCREEN TEST: Splurging for a high-tech, superbright and razor-sharp, 3.3-inch OLED (Organic Light Emitting Diode) touch-sensitive screen gives you more bragging rights, though I'm thinking it's also opening Microsoft up to risks.

The defect/discard rate on these finicky new tech displays is still almost 50 percent, I hear. That's why Sony asks almost $2 grand for an 11-inch OLED TV. It could also explain why Zune HDs have been in short supply, and why my test model all of a sudden got very funky. (More on that shortly.)

People will definitely be drawn in by the "pop" of the picture and by the extra-zippy graphics this Zune automatically generates when music is playing on it.

NOW IN HD: I'm happy that the new Zune HD earns those extra letters from not one but two new exclusive features:

_ Users can tune in digital HD radio broadcasts (where the signal is cooperating), which sound a tad better than conventional FM and sometimes add a second, alternative service. (Philly pop station WNUW (95.7 FM) is broadcasting classical music full time on its second HD stream.)

_ And those willing to pay the higher rate in purchased "Microsoft Points" (an odd conceit) can buy or rent an HD version of a movie which then downloads (very slowly) in 720p high-definition form through a connected PC. (No surprise, Zune products don't do Mac.)

There's no point in splurging to watch an HD movie on the Zune's itty-bitty screen. But hooked (in its $80 accessory dock) directly to a big-screen, high-definition TV, the player delivered better than DVD (but not as good as Blu-ray) picture quality and OK surround sound.

I emphasize the word "directly" because I experienced some serious problems - herky-jerky pictures and sound 15 seconds out of sync with the image - when I tried to funnel the Zune HD's signal through an Onkyo a/v receiver and then to a TV. Never had a problem with other HD products run through the receiver.

Fix the glitch, Microsoft dudes!

MUSIC, MUSIC, MUSIC: What really excites me about the Zune HD is its wireless Wi-Fi access to the $15-a-month Zune Pass music subscription service.

Users can listen to anything and everything they want from Microsoft's claimed, "6 million"-track library - from the hottest new albums to the classics - either streaming live or downloaded into the player's flash memory storage. (The music's available as long as you keep the subscription up.)

With an Apple iPod Touch and iPhone, by contrast, you can newly stream the $15-a-month Rhapsody To Go service via Wi-Fi (reliably) or AT&T's 3G service (sometimes).

But Apple won't let Rhapsody subscribers store any content on their players. A very big point in Microsoft's favor!

Zune Pass music also can be played on a computer signed in to the same account. But if you Microsoft folks really want this service to fly, make it available on some of the other smart Wi-Fi music boxes that people are sprinkling around their homes - like the latest goodies from Logitech and Sonos (see sidebar), where the likes of Rhapsody, Pandora, Napster, last. FM and Sirius rule the roost.

Flesh out Zune Pass offerings, too.

When searching for a well-known artist, the player lists dozens of albums, but often, they're not available. With Nina Simone, for instance, I gawked at 50 albums and singles but could only get to 38.

By comparison, the Rhapsody service I have on other devices lists 77 Simone albums (with many more greatest hits collections), every last one accessible.

APPS TO ACCESSORIES: There are currently nine free apps (applications) available for download to a Zune HD, including weather, chess, Sudoku and a few simple video games. App options for the iPhone Touch and iPod number, oh, 75,000.

You Microsoft guys are pushing the "quality not quantity" line, but who are we kidding?

Good luck, too, trying to build a support network ("ecosystem") of accessory suppliers to help sell your players with their spiffy speaker docks, wireless signal transmitters, sport cases and more. Here, too, the "built for iPod" brand lead is wacky huge, a tsunami to rise above.

THE FINAL STRAW: So, remember how I told you Microsoft guys that the player screwed up when I docked it to a receiver-TV setup? And that it played OK when I connected the docked Zune directly to a TV?

Well, yes and no.

After watching the Wayan Brothers' goofy "Dance Flick" all the way through the other night on a big-screen set, I removed the player from the dock and it felt kinda warm.

The Zune's internal OLED screen blinked back to life but with an ugly embellishment - a white stripe all the way across the display about a quarter of the way in on the left side. I tried shutting the player on and off and changing the "app," but the line stayed put.

While other users have complained online about screen fading problems with the ZuneHD, the stripe was a newbie for my Microsoft contact.

"All the guys I want to talk with about this are in meetings, out of touch," he said yesterday. When pushed, he agreed with my theory that the sometimes poorly connecting dock or that erratic HDMI signal might have shocked the OLED screen into freak-out mode.

All I know is, you Microsoft guys had better not send this player out again as refurbished. And fix the Zune HD's glitches faster than you did with the Xbox 360, a game system still suffering from a ridiculously high return rate.

Send e-mail to takiffj@ phillynews.com.