Change Comes to Xbox

Microsoft launched the New Xbox Experience earlier this week, and to listen to the chatter about it both from the company's own statements and from some within the industry or the media, you'd think that the world of gaming had changed overnight. I've heard more than one person who should really know better describing this as the most important thing to happen in the run-up to Christmas.

Let's get a little perspective here. Microsoft has updated its console's dashboard - you know, the bit of the console that users generally look at for about five seconds before tapping the button to launch the game they want to play. The functionality they've added is minimal. This is a visual and user interface overhaul - a long overdue one, and a very welcome one, but hardly a revolution.

There are, however, a few interesting things that deserve to be noted about NXE, assuming we can cut through the blind hype for long enough to talk about the new interface itself.

Firstly, there's the key driving reason behind this entire update - Xbox Live Marketplace. When it was originally launched, Marketplace worked perfectly, and was an excellent way to find and download content. This continued to be the case for literally hours, before EA in their wisdom uploaded dozens of tiny, individual pieces of content for every sports team in practically every franchise they publish, flooding the entire Marketplace interface and making it insanely frustrating to find anything.

Interim updates have improved Marketplace, but the fact remains that it's really not a great interface for discovering and acquiring content. It's a victim both of its own success and of an initial lack of vision on Microsoft's part. Few believed that Marketplace would be so successful, but Microsoft's original designs for the service seemed to assume that Marketplace content items would be numbered in the tens, not the thousands.

NXE corrects that shortsightedness, to some extent. In part, it allows the more effective promotion and discovery of content through the console's own front end - which is significantly more advertising-laden, filled with "blades" which direct you to featured items and key sub-sections of the store. In part, too, NXE throws up its hands in defeat at the prospect of emulating great online stores like Amazon and iTunes on a console interface, instead creating a PC store where you can buy items and queue them for download on your 360. Call it a cop-out if you like, but it's probably a wise move.

As a result, Microsoft now has arguably the best online store of any of the console players. Nintendo's offering remains curiously stunted, despite some superb early content launched on the Wiiware channel, and its actual store interface is bizarrely weak for a company whose user interface design is normally impeccable.

Sony's store, certainly the best prior to NXE's launch, now looks in need of an overhaul. The tiny scrolling messages advertising new content on the PS3 dash are minimalist, but not in a good way. Like most console users, I don't have any particular love for advertising on my dashboard - but I'd rather like to know when things I might be interested in, like new content for games I own or demos for big upcoming titles, are available.

Sony's XMB is a decent interface in need of a rethink to embrace the concepts of online content distribution. It's altogether more elegant than Microsoft's offering, even now - but having "PlayStation Store" as a single option buried on the XMB, rather than a front-and-centre promotion of your wares, is essentially leaving money on the table at a time when so much new revenue is pouring into publishers' coffers through online content sales.

The other thing worth noting about the NXE update is its tone. Gone is the military hardware styling of the blade-based dashboard. NXE loves pastel shades, mood lighting, big icons and cute avatars. Avatars, it's worth noting, whose astonishing similarity to Nintendo's Miis is all the more noticeable now that we can actually make our own. This is hardly the only graphical style of avatar that's possible, which gives Microsoft's homage an almost creepy sense of plagiarism.

Regardless of whether the Mii team at Nintendo should feel like the recipients of the sincerest form of flattery or not, the message from the whole visual overhaul is clear. Microsoft wants the casual market to feel welcome. It wants everyone in the family to feel like the Xbox 360 is something they can use - much like devices such as the Wii, AppleTV or Sky receiver, all of which have the kind of successful interface design that reaches out beyond the geek cohorts and encourages the rest of the world to pick up the remote.

It's easy to underestimate how much this means to Microsoft. The Xbox 360 is, after all, still widely seen as the Shoot Aliens and Race Cars console (and no matter how many people enthuse over NXE, Gears of War 2 is still a bigger event for the console). In order to achieve the kind of success Microsoft wants from this generation of hardware, it needs to break out of that perception and become a platform with a much wider appeal, and replacing Marcus from Gears of War with a grinning, cartoony 360 Avatar as the face of the console is a step in that direction.

But this isn't just about the 360. This is about Microsoft's place in a much wider market, because right now, Microsoft is a company that isn't winning the battle for hearts and minds in the consumer space as a whole. After watching its online services being trounced by Google, Microsoft is now seeing a serious contraction in sales of Windows PCs to consumers.

The true extent of the damage Apple is doing in this field is masked by the continued strong sales of PCs to corporate customers, but in consumer fields - especially consumer laptops - Apple's market share is growing extremely rapidly. The popularity of Apple hardware and software is seen in some quarters as a timebomb, too. Steep discounting for university students is skewing Apple's userbase towards young people, and in five years time university graduates with a preference for Apple gear will be proliferating through the workforce.

Meanwhile, the Zune struggles upstream against the iPod and assorted other rivals (with players such as iRiver's range taking up much of the "anything but iPod" market which Zune had hoped to exploit). Windows Mobile is facing a potentially lethal two-pronged attack from Google's Android and Apple's iPhone.

Large numbers of consumers, in other words, are now walking around with laptops that don't run Microsoft software, talking on phones without any Microsoft software, and using online services that Microsoft can't touch. Whole swathes of them simply don't have any interaction with Microsoft software or services - and those numbers are growing, not falling. Microsoft is a company at risk of losing its grasp on the consumer market.

The bright spot in all of this, right now, is Xbox 360. After carefully divorcing the Xbox brand from the undoubtedly tarnished Microsoft name, the company has managed to make the 360 cool and appealing to the traditional gaming audience. Now it needs to make it welcoming and attractive to casual gamers and families. Almost as much as it is a revamp of Marketplace, NXE is a clear statement of intent regarding Microsoft's future plans for the Xbox brand and the audience it wants to attract.

It won't be easy. Across the company, Microsoft habitually makes basic errors in its consumer strategies - preferring huge feature-sets to ease of use, and opting for power or customisation over reliability, for instance. The Xbox 360's ongoing problems with reliability (which still aren't fixed, even if they're much improved in recent months) are exactly the sort of thing that will turn consumers off the Xbox brand forever, and the thinking which has allowed this to happen is going to be just as difficult for Microsoft to overcome as the challenge of building a software and services line-up that appeals to a broad audience.

The things really worth doing, however, are rarely easy - and Microsoft knows how much is resting on the success of the Xbox 360. With the Xbox installed as the default media and entertainment centre for the home, it can rebuild its damaged consumer reputation around that brand. Without it, this software behemoth could find itself a sitting duck for opponents like Google, Apple - and even Nintendo and Sony.

And as for those hardcore gamers who look with trepidation at the Wii-like avatars on NXE - you do so with good cause. If you didn't like the Wii's approach, you're going to hate what Microsoft has to do next in order to extend its market and secure its consumer future. NXE isn't the biggest thing to happen in the run up to this Christmas - but it's a sign and portent for exactly how next Christmas may well look.