What Could Kill the Xbox 360

I'm a big fan of the Xbox 360, especially since Mt. Dew paid for mine. You can't beat getting something for free in order to become a raving fan of it. But, looking into my crystal ball, I can see a scenario that will absolutely kill the mass adoption of the Xbox 360.

By now, everyone knows of Microsoft's secondary motivation behind developing the Xbox 360: to become THE device to bridge your television with the rest of the computing world. I'm not sure if I agree that the way that they're doing it is necessarily the best, and a competitor could easily take this role away from the Xbox.

You see, out of the box, the Xbox 360 allows you to access audio and images that are on your home network and play them through your home entertainment system. For example, you can listen to MP3's on your stereo, or view a slideshow of pictures on your HDTV. Microsoft, being the friendly chaps that they are, even gives away software to facilitate this. But, the other aspect of multimedia - video - does not come for free.

If you want to view video through the Xbox, then you must use another Microsoft product: Windows XP Media Center Edition. Ah, and now we see where synergy enters the picture.

Over the past couple of months, I have taken a deep dive into the world of Media Center. It truely is an interesting technology and the improvements coming down the road in the Vista timeframe will make it even better (especially how they will allow developers to enhance Xbox 360 extender experience). But I don't think it's the best piece of HTPC software out there.

I'm willing to bet that a significant population of Xbox 360 owners have no interest in buying or building a dedicated HTPC running Media Center Edition. But, that doesn't mean that they do not want the ability to watch video on their Xbox. Herein lies the fatal mistake that Microsoft is making, IMHO.

By strongly tying video playback capabilities of the 360 to another SKU that the user may or may not have, Microsoft is opening the door for Sony or Nintendo to release an open solution to allow for their consoles to serve as a HTPC extender. If this were to happen, then you know that MythTV, FreeVO, MediaPortal, SageTV, BeyondTV, GB-PVR, and every other piece of PVR software will immediately work on supporting that console as an extender.

What would Microsoft do then? They would have significant market penetration, but as we all know, game consoles are replaceable devices (even at the $400 price tag). The early adopters of the Xbox 360 will likely jump to the next big thing when it comes out anyways.

Assuming that they would still pursue the vision of the Xbox 360 being the central device in the total media experience, then Microsoft would be forced to either offer equivalent capabilities for the Xbox (via an update), open up their extender technology to the other PVR software folks, or just sit back and watch the Xbox become obsolete.

It will be interesting to see if Sony or Nintendo will think to offer this in their next generation consoles.