I've written in the past about places where Microsoft could absolutely *own* the infrastructure of the home by establishing a beachhead in the living room -- not to mention the previous assertions about their development tools.
I still believe quite strongly that a well-targeted home computing platform is just a couple of software tweaks away for Microsoft. Today's edition is all about authentication. I've got a bunch of PC's at home, including some VM's. I've also got a Drobo 5N and a PS3 and a bunch of networking equipment.
You know what stinks? I need to set up logins on every single one of these devices individually, and they're not connected to one another (so "Fred" on one box isn't really the same login as "Fred" on another box).
Microsoft, give me a lightweight Active Directory for the home -- something I can obtain without buying a Windows Server license, okay? Here's a hint: if you built this into thew new XBox, I'd buy one, and I bet a bunch of other people would, too. Let me use this for DNS, so I can type "router" into my browser and actually get my router, instead of making me set up a HOSTS file on every single PC I own. By the way, how many average consumers would even know that's possible??
I fully expect that the new XBox, when it arrives, will let me stream photos and music off my Drobo, but if you want to really take this idea to the next level, how about selling us a Pogoplug -type of device I can give to my Mom & Dad so I can (1) set up user names for them, and (2) let them see photos that I don't plan on uploading to Flickr, etc.? The idea here, by the way, since I'm spelling everything out in excruciating detail, is that just about every family has one or more members somewhere who (a) own a gaming system, and (b) understand enough about computers to be the family SysAdmin.
Oh, and by the way, since you've given up on Windows Home Server for reasons I've never quite been able to fathom, and since you now aspire to be a "devices + services" company, why don't you just go ahead and buy Drobo and make their stuff work with yours? I'd happily plug mine into a new XBox.
I swear, if Microsoft were able to get their collective heads out of whatever orifices they're lodged within long enough to make an XBox that actually acted like it was part of a family, they'd crank up another WinTel-style monopoly to last them a good dozen more years.