The problems with the 360 highlight the serious problems with Microsoft consumer strategy. This is the direction MS should have taken (and includes the Zune):
- Unified Marketplace(s) and purchased content portability (aka fix the DRM). Xbox Live Marketplace, Zune Marketplace, Windows Marketplace. Too many marketplaces. These all need to be brought together. Microsoft really needs to copy the iTunes model here, content bought that can be used anywhere (video, audio) should be usable anywhere. Why if I buy an episode of Star Trek The Original Series Remastered is is locked up on the Xbox? No good reason is why.
- Synching and Streaming. Say I have my main Xbox under my HDTV in the Family Room, but my son is watching something and I want to sneak some Crackdown in. I might go to a 360 in my bedroom, but there is no way I am even going to create that setup. Why? My saved games, my content, are not going to be kept in sync because each 360 in your house is an island, it's a silo of content.
- Sharing content bought on the Marketplace (fix the DRM part 2). This isn't specific to Xbox Live, iTunes doesn't let you do this, but while we are here. If a friend has bought a game that he thinks I might like, I can borrow it and get a full non-trial experience. He can't use the game while I am playing it, this is an obvious but key point. How does this apply to sharing? If I buy a game, a show, any piece of digital only downloaded content, I should be able to share that with people I want if I give up access to it. Let's look at an example. I buy Geometry Wars for 360 from Xbox Live Marketplace. I tell a friend its pretty cool, but the trial isn't enough for him to decide to buy it. I should be able to "share" it to my friend, so he gets the full version. He can play as long as he likes as long, but I can't play it while he "borrows" it. I know, never going to happen right, MS is throwing money away with this flexibility, the content industry has always wanted to eliminate the used market and friend borrowing, that's revenue they are missing. People are just going to avoid digital content when freedoms and common sense aren't there.
- Cross platform This is not just because I use Macs at home and now at work. With the May 7, 2007 Spring Update adding support for industry standard MP4 and MP4/H.264, formats popularized by Apple. This will allow non-DRM content from iTunes to be played on the 360, but MS needs to embrace all of the above and make sure it all works on OS X. Microsoft's move with Silverlight is encouraging.
Why do I think this is all important? Because while Apple TV doesn't have buying content directly from the device or HD content, their is a window of opportunity for the Xbox 360 to grab more share of the living room as an entertainment device, not just a game console, and I would love to see Apple have a strong competitor. Given that MS is about to unleash the Spring Update to the 360 without any of the above and they are releasing every half year, and Apple is planning on software updates to Apple TV (I don't think its a stretch to predict they are already working on), its only a mater of time before Apple closes the gap with the few advantages the 360 has over Apple TV, and I think MS has a larger gap to close for the things Apple TV and iTunes already get right.