it's possible. i'm sure they have a patten that's more lucrative.

The Xbox does two things for Microsoft, which it wasn't prepared to do in the late 1990's.

1.  The Xbox allowed Microsoft to think outside the "Windows" box.  Prior to the Xbox you likely would not have had a Microsoft consumer device based on Windows that didn't use a traditional looking PC interface, i.e. the Start button.  Instead, Microsoft implimented its first true consumer product, based on Windows, that didn't look like Windows.  A big step.  That lead to the Zune and Windows Phone 7.  Two products that evolved from the Windows UI.

2.  It puts Microsoft in the living room.  Microsoft has been, for years, trying to gain a foothold in the living room.  It bought WebTV, which eventually died, and it's the OS for Motorola set-top boxes.  The Xbox is by far a bigger succes and more important product than Windows itself.  Part of Microsoft's future is based on the Xbox.

3.  Microsoft had to compete against Sony.  Sony back then was threatening Microsoft's position with the possibility of being able to turn every PS2 into a Linux PC.  If Sony wasn't going to work with Microsoft, if Sega couldn't beat Sony, then Microsoft had to enter the market to ensure that Sony couldn't undermine Microsoft in the PC market.