XBL Arcade games? Probably not. Music integration? Sure
More details on Microsoft's worst-kept-secret continue to filter out through the blogosphere. Both Engadget and Gizmodo have updates on the device from their sources, details further cementing the idea that Zune, at least in its initial release, will not have anything to do with games. That doesn't, however, mean there won't be Xbox 360 hooks.
Much like how an iPod can share music with an Xbox 360 via a USB cable, this will also be possible with Zune. The one catch with Apple's hardware, however, is incompatibility with iTunes-purchased files. As you can probably already guess, there won't be similar issues with music bought from the store Microsoft will be sponsoring alongside Zune.
The blog's insiders also speculate an iPod Nano competitor possibly titled 'Pixas' is also in development, and will feature video support ala Apple's current high-end iPod. If the device comes to fruition, hopefully Microsoft will allow Pixas owners to watch their videos on an Xbox 360, too.
Stay tuned for more, but unless Microsoft makes some drastic changes to their device from the leaks, an Xboy-like device is not in the cards -- for now.