Here is the difference about a smart phone. It does not have to be always listening, because most people are always using it for something. It has everything you do on it.  It has your phone calls, your voice and text messages, your hangouts and search results.  Pictures tweets and social media.  There is so much info that the goverment could gain from you from your personal phone its beyound real.  If the goverment or anyone else wanted to hack Kinect just to gain info on your I am sure your pesonal phone is probably much higer on the list.

Trust me - "they" can. I work for global mobile operator. "They" can always listen and watch you through your smart phone even if it seems to be off.

You can turn on phone remotely. Every thing you say when phone is dayling is already recorded. This is really scary to know all that, but hey - it's a part of every day life. Even call attempt is more then enough to locate you. Furthermore all your activities must be stored for 5 years on backup.

Surely a cellphone can be used to gather more infos WHEN IN USE, while in standby it will just allow to track your position, as other activities would drain the battery too much.
But a camera with microphone always on inside your house, linked to the net, and without battery life problems limiting its working, cannot be considered not potentially invasive of privacy.
The solution for both smartphone and cameras inside your house concerns is the same: being able to keep them off when you don't use them. And there isn't absolutely any technical obstacle for MS to allow users to keep kinect off by default, if they care more about privacy concerns than about having it always ready for voice commands. Nothing terrible for MS to give users this choice, unless it's craving to control its users lives.

So, to sum it up: no need to bash MS, it just must offer users the choice to keep it off by default, and even disconnected, if they want, or connected and always on and ready, if they prefer so, and everybody will be happy.

Edit: obviously no need to bash MS, as it will most probably do another 180 and modify its policy to just what I described, but also no need for some MS' minions to condescendingly downplay some users' concerns about privacy.

It clearly cant be fully turned off, otherwise you would be allowed to unplug it from the system and your not. Doesnt bother me anyway as i would not stand it on my tele so if i have to i will leave it plugged in but it will be on the floor down the back of the tele stand, where it cant be seen. 

Think i finally found why it is mandatory

Controller recognition: This works in junction with identity. Each controller is bound to the player holding it. There was a question asked about removal of the LED rings and not being able to tell who is player X. It doesn’t matter which controller you are using. The console handles it and recognizes where you and your friends are in the room and adjusts accordingly. We can even tell when one person is holding more than one controller.

So it sounds like its needed so you know whos which player as the pad doesnt a pad number anymore.

This fully justifies it being mandatory and on when the console is in use, but it doesn't make necessary to keep kinect always on, even when the console is in standby.

The first two aside, I recognize the third, however the mic is listening for "Xbox On".  There is enough power for Kinect and the Xbox One to respond to the "input" from Kinect.  Much in the same exact way that a laptop or PC in standby, when the mouse is moved, starts up.  There is enough power to power the mouse, which sends an electrical signal down a wire, that activates the power circuitry, that turns powers up the computer.  The difference here, with Kinect, is that Kinect is powered and listening.  When it hears "Xbox On" it sends that signal down to the Xbox One, where it activates the power circuitry, and that in turn activates the the console.

It can't record.  Not while it is in standby mode.

3 blue lights are just IR but that one on the right looks bright. Camera itself looks bright though so hopefully it is a reflection.

I saw the future back then but you didn't believe me.

I accept your silent apology.

Nah, dude, those 3 lights are infa red and most we would see a soft glow.  The camera can capture a wider range than us humans can see.  The one is the reflection, the other is the logo LED, and it looks bring because of the contrast.

We can't see the Infa Red well, just like we do not sea a starfield around the room with today's Kinect.  Even some cell phone cameras can see Kinect Infared Light.