Xbox Gets the Message

Microsoft plans to flip the switch on May 7. People with Live Messenger IDs will be able to see their buddies with Xbox Live gamertags and visa versa. Implications are twofold: Microsoft continues to expand and extend around social networking concepts; Xbox is increasingly becoming the centerpiece of Microsoft's living room strategy, perhaps even more than Media Center.

Microsoft is more focused on social networking than either Google or Yahoo. While not recently evident, Microsoft's Live strategy is built on relationships, with the understanding that the Web is just too big for everybody to find anybody. The Internet's great shortcoming is sprawl. There are just too many people or places online.

But the Internet is not too big for people who know one another to find each other—if they have the right tools. Rather than add to the sprawl, instant messaging contains it, by putting emphasis on connecting people who know one another. Microsoft has been building out Live to achieve its relationship goals using instant messaging as the core.

The company treats the individual as the "me" at the center of an expanding concentric circle of relationships, such as family, friends, co-workers and mates—whether school or gaming. Windows Live Messenger is the core for the "me"—a single identity connecting to others.

Zune music sharing, Xbox Live online gaming and Windows Live Spaces "gleams" are among the many pieces Microsoft is assembling around online identity and the "me" connecting close relationships.

Problem: Microsoft has been building out its social networking infrastructure at glacial rather than Internet speeds. People are finding plenty of other places to socialize online, such as Facebook, Flickr, MySpace and—oh my—Twitter, among many others. The Live vision, which is suffering through transition, remains one of relationships. But Microsoft better hurry because people forming relationships elsewhere might be slow to switch to something else.

Gaming is social like almost no other activity, and so the coming together of Windows Live and Xbox Live is a good fit with Microsoft's broader relationships strategy. Microsoft could really stir up things by opening up Spaces and some other Windows Live services to Xbox Live gamers, too—live blogging Live gaming?

One question: Where will Media Center and Xbox user identities meet? Microsoft has long offered instant messaging as part of the Media Center experience, and certainly there will be some connectedness after May 7. But it increasingly looks like Xbox and Media Center are vying for the same space in the living room.

Windows Vista subsumes Media Center, which while making it more broadly available also buries the software as a distinct product. By contrast, Xbox is a distinct product and brand.

Right now, I'm testing Apple TV, and I just don't see the comparisons some people, including some Microsofties, are making to Xbox 360. Apple TV isn't a game console, nor is it intended to be. But I'll concede: if Xbox 360 competes with Apple TV then it also squarely competes with Media Center.

Back in 2003, Ed Graczyk, director of marketing and communications for Microsoft TV, outlined for me the company's "better together" plan for the living room. He articulated a strategy around the TV, that included cable or IPTV content and Xbox—and possibly Media Center. Better Together clearly is Microsoft's approach to the living room, but it's looking more and more like Xbox will be the centerpiece rather than the Media Center PC.

The recent launch of Xbox 360 Elite, which is very much about high-definition entertainment, further extends Microsoft's console way beyond games. I've long regarded Xbox as a Trojan horse, with Microsoft seeding living rooms with a device that can do many other things. HDMI support and other enhancements make Xbox 360 Elite a better citizen in the living room connecting to big-screen TVs and surround sound systems than most PCs—even those with Vista.

If today's Windows Live Messenger announcement means nothing else, it's Microsoft's tacit concession that the role of the game console in the living room is going to be stronger than the PC. But shouldn't that have been the obvious conclusion long ago?

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