The Xbox Story, Part 1: The Birth of a Console
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It may seem trivial, but what I also liked about it was the boot screen menu. It was quite radically advanced, it felt futuristic. Remember this was back when Microsoft was even more frighteningly good at what they do than Apple is today. And when I saw the 3D menu, with all the futuristic sounds and whatnot -- you knew this system was for real. But the Xbox360 seemed a bit like a step backward, it was more refined, but didn't have that badass feel to it. And then Microsoft kind of fizzled away in the years since.
Oh, how times change.
This is also why none of the Korean or Taiwanese cell phone makers that had huge market shares were able to beat Apple to the iPhone (and even now, all they do is provide hardware for Android, which is American as well), or even beat RIM to making an email-friendly cell phone.
So the question, to me, is not the future of the XBox so much as whether MS can leverage their impressive game technology to get a foothold in these emerging ecosystems. I'm generally not a fan of WP7, but the games have some very impressive technology and I think their studios could make something of a completely different caliber than anything Gameloft/Chillingo are doing. If they can create a groundbreaking Halo or GTA-like game phenomenon on their phone platform it could be their best chance to stay relevant in the consumer space.
A solid prediction, as at least one such device already exists: http://www.roku.com/roku-products (This is amplification, not disagreement or a "gotcha".)