The Xbox 360. Over the past two years, this console has gone through many trials and tribulations, as well as many successes and accomplishments. Microsoft has done many things right over the course of the console's life this far but in other areas they have completely dropped the ball. If Microsoft could quit fooling around with showing flashes of brilliance in some areas, while screwing up in really ridiculous ways in other areas, they should be able to dominate the console war between themselves and Sony.
I really believe Microsoft has made great strides to advance their game library far above the place the original Xbox reached. They finally put their best efforts into breaking some of Sony's exclusive third party deals, and worked on making a few of their own. Grand Theft Auto IV, although I am opposed to the franchise, could have easily propelled the PS3 well past the currently impressive figures the 360 has shown, even with a timed-exclusive. The fact that Microsoft went above and beyond to spend $50 million on exclusive downloadable content makes evident the fact that they aren't playing around. Microsoft wants the superior version of GTA on their console, expecting the fanboys to follow the yellow brick road of Grand Theft goodness all the way to their console. I would even say breaking the Assassin's Creed exclusivity deal was a crucial move, as there was a good chance the visual powerhouse could have swayed some people in favor of the big, juicy Blu-Ray player in Sony's camp.
Another thing Microsoft has continued to do right is the Live service. Using the original Xbox as a training ground, Microsoft has really seemed to pushed its online service further to deliver what is by far the strongest online component of the three consoles. Everything from in-game guide blades, to the Video Marketplace, to the Live Arcade service, everything seems to be very polished and well thought-out. Now with the XNA initiative on the horizon, plus the upcoming spring update, it seems that Microsoft is pushing to relentlessly keep its service the far-and-away favorite of this generation.
Although this things are all well and good, the Xbox 360 isn't all well and good at the moment. They continue to struggle in the "Land of the Rising Sun" as there console continues to be a non-factor there. I can't blame this completely on Microsoft, though, as they could have easily thrown in the towel by now, by they are persistent. Releasing Lost Odyssey, Eternal Sonata and Blue Dragon was there attempt at really grabbing the Asian market, and although Lost Odyssey did reasonably well, it was nowhere near enough to grab a reasonable market share.
As I previously mentioned, I find the Live service to be the definitive online infrastructure for consoles, but I think it could see some definite improvements. First off, Live needs to be free. I don't believe that they can't make the money back that they are charging for Live in other ways. I believe this is really holding back their potential market, as many casual gamers are intimidated by the concept of "Pay-to-Play." I also find paying for their service ridiculous since we are still being shown advertisements of non-Microsoft products when navigating the marketplace, which is inexcusable in my opinion. I also believe that rolling out dedicated servers for the big titles (That's right Halo, you could have had servers dedicated just for you!) as opposed to using peer hosting would be a wise choice. At this point, Frontlines is the only game to be hosting their own servers, and for the most part, it seems to be a success. Over in Sony land, the PS3 seems to be thriving using dedicated servers for games like Warhawk and Unreal Tournament III.
Another problem I see Microsoft suffering from is the hardware itself. First off, there are too many models on store shelves. They need to get rid of the Halo 3 limited edition (it's a limited edition for a reason), and get rid of the Pro/Premium console (or whatever it's called now.) I believe going forward, they will continue to confuse the casual market, as there are so many choices to pick from. I believe having the Elite for the "true gamers" and the Arcade for the casual market will give them the best chance of reaching the main demographics, while keeping store shelves uncluttered of the myriad of models available.
The list of Microsoft problems doesn't end there. There is the ever-frustrating issue of the Red Ring of Death that is most certainly scaring people away. There is the fact that Microsoft continues to screw-over the early adopters by charging unfair amounts for the standalone 120 GB Hard Drive. There is also a problem, that won't be easy to fix, which is the fact that the Xbox 360 does not contain a Blu-Ray player. There standalone HD-DVD player is now obviously useless, and I believe the lack of a Blu-Ray player will hurt them. "Oh, but we have the Video Marketplace available to the consumers!" Ya, that's great and all, but most of the people vouchhing for that will be the early adopters, and when an HD movie takes up 5GB of space, the 20GB Hard Drive that they've been stuck with gets a little crowded.
In the end, though, I'm still supporting what Microsoft is doing. They have put pressure on Sony to actually create a proper online service, and they have really given the gamers what they want: A strong library of games. As time goes on, I believe the console will continue to expand the market, and if the rumor of a Wii Remote-like controller on the horizon, I believe they will have finally have a way to compete with Nintendo.