Microsoft really, really, REALLY needs to look in the mirror and change the way they do business. Their videogame division has lost them $5.5 billion over 9 years, and they are a marginal player in the console market, far behind the Sony-Nintendo power duo. The original Xbox was a solid machine with a fine roster of games. But the 360 has had serious quality problems and cannot match the PS3 on features (it's a long list: WiFi, BluRay, replaceable harddrive, free online). Nor has Microsoft built up a studio network comparable to Sony or Nintendo.
Ironically, the one feature Microsoft touts as its ace card -- XBL -- is a glaring testament to Microsoft's weakness. Because seamless online is not going to be a console monopoly for much longer. Every cellphone on the planet is going to get into the act. What ringtones were to the age of MP3s, downloadable games will be to tomorrow's mobiles.
I'm not saying any of this out of any hatred for Microsoft -- they're just another big company in a world of big companies. The issue, rather, is this: at its heart, Microsoft remains an OS monopoly wedded to a 1990s vision of desktop computing, and this design philosophy is the cause of most of their videogame woes. It's high time they admitted their mistakes, started over with a clean slate, and gave their game division the managerial autonomy to take some risks and reinvent itself. This will be good for videogaming, good for consumers, and good for Microsoft itself.