I have always thought Microsoft really instead of Making the Xbox or (media center PC) as the Main Gaming Box for the Living Room, Would have been Better off Making a XboxOS instead of Trying to build a Box themselves all by themselves.

What has transpired, has in my opinion allowed a former Microsoft employee to fill a Niche that Microsoft in all blunt truth, would in my opinion been the strongest way to make a play for the living room, and in effect has made an opening for not just one company to challenge the play for the living room, but has in effect made the companies that have direct competition with Microsoft, a better chance to compete, than most likely those companies would not have as a higher chance to be able to compete let alone get a good start against Microsoft.

Example:

Digital Foundry on how the Steam Machines are the first step in taking PC games to places Windows can't reach.

"Divorcing Steam from Windows is the best chance Valve has in significantly growing its userbase, and the Steam Machines are just the first part of the plan."

 http://www.eurogamer.net/articles/digitalfoundry-2014-in-theory-steamos-and-the-opengl-factor

I think a key point about this is:

In my opinion; its not about a complete "Divorce" from Windows OS but has opened up a Window of Sorts for other companies with a OS that they may make to Make a play , to become the Main OS for Gaming for the Living Room instead of Windows OS being the Main OS powering your game Box.

Do you Think Microsoft would have been better off , Taking Windows and design a Version That Made Gaming Front and Center as the main function of the OS and made It designed for OEM's .

Now you have Steam and Google's OS and Amazon and Samsung all Using Android and Linux base to make just that; A Game OS designed for cheap cost Hardware.

With the recent Moves By Microsoft, do you think this is Microsoft Shifting Focus to try to cut off these Move's by Other companies, and do you think that Microsoft may have been able to lower the other companies chances of shifting away from a living Room OS based on Windows, or has the Other OS making companies been able to make a viable choice of Living Room OS for a Media Center other than Windows Based and has Made a good challenge to Windows Living room Media Center PC's that is Today xbox?

I think Microsoft has made a Opening that could really been have avoided. Its too late now, but Phil is it seems trying to cut these other companies off at the Pass. Do you think he has done it or is it too late, and that Amazon , Linux, and Android now in direct challenge to be a real choice over Windows?

I am so confued at what you are saying, if they wanted to go the PC route wouldnt using windows and then their own Steam like store would have been the best bet.
And the console was a direct attack on Sony of sorts.
http://au.ign.com/articles/2013/02/06/why-microsoft-got-into-the-console-business

What I'm saying, was picture design phase of the 1st Xbox, instead of making the Xbox as a physical Box, make a Game Box OS, and design the Api direct more to metal like DirectX 12 back than!,  I mean the SOC's were not as advanced as today no real level, but they would have a real big advantage.

I think trying to penetrate the living room market with a physical game console for Microsoft was not a bad idea, but I do think it was a Mistake, that has more long term problems for Microsoft than it would have if they would have made Xbox platform as Just an OS that is tailer made for Gaming.

What I think is Steam OS should really have been Microsoft's real direction for what is Xbox, Now There is other companies because of Microsoft going with a physical box has in effect getting a head start ahead of Microsoft.

The writer had his best intentions with the article but missed the point many times and again. It was mostly wishfull thinking and best case scenarios for the success of Steam OS.

This article is one year old, and Steam OS hasn´t made a dent on the PC market.

Tegra K1 was a embaracement for NVidia. And Shild... well, we all know how it went.

Developers are still moving to iOS and Android experiences.

Any way, Steam OS has the potential to deliver better performance than iOS and Android for console level games. Question is "Do people realy want console level games would move from Sony and Microsoft and Nintendo?"

Also a direct Attack on Sony, I think was more or less a real dead end for Microsoft because it is more money for less gain, than would have been going the route of what Gabe is doing.

The evolution of a windows Game OS without having to split with windows PC would I think allowed Gaming on windows to much more unify with the living room console market, because by now from the very 1st Xbox to now, the Resource's being split could have been the same development Time and release.

If the Game OS was used instead of trying to make a box for Microsoft it would have been a better fit, in my opinion.

I think the advantage's far outweigh the negatives of not having a one only single Xbox only made by Microsoft itself. There should have been in my opinion any PC could have been an Xbox with an XboxOS loadable on any PC hardware including Media Center PC's

No they haven't. SteamOS is going to flop soooo hard, and the same goes for steam machines. People that wants PC will still buy PC and people that wants console will still buy console, steam machine is only going to be good for some unexperienced users that don't know how to build their own PC and aren't interested in consoles...

 My point saying this is that they did the best thing they could making a gaming console not another OS that would flop and in the first place makes no sense because they already make an OS for most PCs/Boxes and it's called windows.

But while I see what you are saying about how well its done in the market Steam OS is not officially released yet. The main point is with Linux and Android devices has made a dent into the living room, also add in smartTV's which what is the main OS used in Smart TV's?

I think that if Entertainment App's are front and center now back than 12 years ago, Microsoft could have been where Android is for smartTV's  and pretty much any consumer electronic if the Xbox platform was really an OS that could have been loaded on consumer electronics made by any company. 

Steam OS going to flop?

I really do not think So for many reasons because its a 100% completely free OS!

What many I think such as your self are overlooking is Steam Machines are not just based on taking a off the shelf PC to be the only device that can be a steam Machine!

Smart TV's could run a Steam OS! That's the point !

Damn, imagine a direct to metal OS for a top spec gaming PC? With console-like optimisation games would be way ahead of what they are now. Oh well, maybe in another universe..

Nope. Its an ecosystem and Xbox hardware is a part of that. Windows PC+Xbox+Phones+Tablets.

And Steam Machines are not going to be a big hit.