What Microsoft did very successfully was to sell people on the potential of Kinect. Remember that infamous promotional video with the kid scanning his skateboard and the girl trying on clothes virtually? Borderline deceptive but also very clever. People were thinking that this kind of thing would be in the near future for the Kinect device.
The reality is much more mundane. It turns out that Microsoft was unable to evolve the current version very much though software. Some of the ideas they got people excited over, it turns out Kinect sucks at. They just weren't able to do these things without causing frustration, which is the bane of entertainment. However, there are some things Kinect does very well, such as dance and fitness games, and I think that was the saving grace for the device.
The bigger picture, the space they want Kinect to dominate, is the concept of Xbox + Kinect taking over the home entertainment area for the entire family, not just people who want to play games. That's the market Microsoft is after. Not the core, not the casuals, but everyone. Microsoft identifies four kinds of Xbox customers: the core, the connected, the family-timers, and the dabblers. And they want them all.
Kinect kind of fizzled with this generation, but I have no doubt that it will be a very big centerpiece for Microsoft next gen. Honestly, I kind of believe this version was sort of a throwaway version, a test release on a system nearing the end of its life-cycle, with real market penetration planned with the Nextbox release.
The question is, will they succeed? Will non-gamers buy Kinect v2.0 just to control their television? Will they improve game-play enough that core gamers will see Kinect titles as 'must own'? Will Kinect be a big part of the future of 'home entertainment consoles'?
