It supports txt, pdf, html, lit files which can be converted to images. And its a freeware.
As you can see a document 'Overview of Windows XP Service Pack 3' opened in Zune friendly format which was converted from a PDF, it can be read very easily on Zune. But it only converts texts without any image. The text are crisp, sharp and clear on Zune & can be easily read.
To get an exact idea of what size is obtained after conversion, I got the actual ebook 'Alice in Wonderland' from Project Gutenberg. It was text file of size 160KB. Now let us convert this e-book for reading it in Zune.
Start the eBook to Images and import the e-book by pressing 'open ebook' button.
And choose 'Custom' and set Screen width as 320 and Height as 240 and Image Type as JPG. Check 'Page numbers' which will display Page numbers on Top right. Let the Font be default 'Arial' as it gives very good clarity after conversion. I tried with 'Calibri' Font but it was bit thin so it may be a bit difficult for some to read. And change any other option as needed as Inverse colors, changing Background and text colors, Font Size etc. Now press 'Convert to images' button & that's all.
Now the 160KB ebook in text format is converted into series of images which can be read in Zune. After conversion of this, it was ~ 16MB in size with 330 JPGs format images which can be read in Zune. These images were put in folders, each folder containing 100 images, this can be set in options according to your choice.
The e-book after conversion is very clear & sharp to read in Zune. I have kept default background and text color and it was comfortable to read for long duration also. If one wants, one can play it as Slide Show, Just increase the Transition time to 30sec. so that one can read the full page and the page will change automatically and you will keep Enjoying reading any E-Book on your Zune. Also one can set the brightness to low for long readings. These can be changed from the 'settings' option of Zune.
So all the E-book Fans, Use your Zune to read your E-books on Zune.
Let us see what else Zune can do !! Zune Rocks !!
(Thanks Amit !)