One of the features that made the original Zune stand out from the iPod product line, was the ability to transcode your media in your collection to a lower bit rate when syncing to your portable Zune device. 

This made it simple to have Lossless copies in your media collection kept on your PC, which are often encoded at a higher bitrate yielding larger file sizes.   With the Zune80, which supports Lossless, the large files would be copied to your Zune, with no options to control how the media was encoded.

When you chose these files you wish to sync to your portable device, the software would transcode them to a lower bitrate as they are copied to your device.

With version 2.5 of the Zune software, the transcoding feature has returned:

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These settings appear to be on a per device scope, so you could choose how your media is transcoded depending on the device.  For example you may wish to transcode to a lower bitrate for your Zune4 while working out, compared to when you are syncing to your Zune80.

This allows you to have a media hub at home of higher quality media, which you can transcode, or downgrade to your personal acceptable format to fit more media on your smaller portable device.  I would recommend ripping all your CDs to WMA Lossless on your PC, and then setting the device quality to be lower.  This assumes you have the sufficient space to store lossless versions of your media.

 

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