I'll throw my hat in this. Mainly i agree with couchmonkey, Microsoft has implemented some nice on-line and is now trying HARDER to diversify their games, but from a marketing sense. Come now Otogi / Panzer Dragoon / Jet Set Future / GunValkyrie / Ninja Gaiden / Phantom Dust (which had on-line and kicks Halo's ass all over) were all titles on the original Fat Box which had a very Japanese Flavor and were outside the Shooter American demographic. Problem was not many people outside the gaming community knew, cause MS didn't bother marketing it around the US just in Japan. This holds very true for Phantom Dust, which is a microsoft funded game, made in microsoft studios, but had to be brought over by majestco to the US (I won't get into how awsome this game is, but it is extremly good and different).
Now with the 360, its like they woke up. Now they see some need to diversify so they are marketing it, The pinata, the kameo, the blue dragon. But kameo and VP failed hard, and the only other japanese sucesses stories on the 360 that i know of are Dead Rising and Lost Planet, and one is a zombie game which American players seem to like regardless of who developes it. So if blue dragon comes, and fails to deliver, I question whether Microsoft will continue this diversity marketing approach when Gears of War brings home more cash, and Tom Clancy "insert something" WAR game and GTA style clone too.
Spak-Spang the way I see it is they do on-line better than sony, but Sony doesn't make you pay. They promoted HD before sony, but lets look at the fact that most gamers play in SD and the fact that throught the history of console gaming it's usually the system with the LEAST power that gets the most development and usually wins that generation (I know the SNES was techincally superior then the Megadrive but the Neo-geo and turbo-gfx16 were superior to the SNES, and the NES was competeing with the MegaDrive for a while). The only reason everyone is jumping on the "HD" bandwagon is cause sony is doing HD, if Sony said screw it to HD (like if they never made Blu-ray or sold HD TVs) then 360 would be getting less support, becuase companies wouldn't be intrested in taking on higher operational costs with greater risks, for less return. Everyone says HD is the way to go, cause the publishers still see Sony as a power house, and IF the PS3 ever picks up steam, they have the tools and experience from the 360 to switch over to PS3 development whenever they want.
Seriously, the HD support is all bells and whistles, the PS2 was damn weak, with craptastic on-line, only 2 controler ports (which severly limits multi-player in house too) and it mopped the floor with gamecube and xbox, AND IS currently mopping the floor with the 360. Only once in the 360's life did it manage to come ahead of the PS2, ever.
Anyway back to the point. Original XBox was what i call niche gaming, 10 years later, when no one can play Halo cause it burns their eyes, is too "ugly" or is to slow compared to "modern gameplay"(which are some complaints of old Golden Eye fans i know) no one will remember the few good games from it, because there are few. For finacial, Xbox Fat was a MASSIVE failure. I know i read it before, and i'll try to find the link, but MS isn't all rosey about Xbox brand either, the company has some internal quarrels over the system. Seems like some people there don't like blowing billions, and they want to terminate the console, which is why some people point out the 3 console plan that MS stated a while ago. If MS doesn't make it out of the Red with the 360, they still may throw up 720, but if that doesn't make bank, I'm sure people inside the company will pull the plug. Also aren't 360 sales rate on par with Xboc original sales rates? If so, Xbox original total worldwide sales are less than N64 (like 18 million or so less), and that was considered a failure by many.
EDIT: Yeah also about that MS on-line you gotta wonder if console gamers really like on-line, or do they just hate paying for it. It'd be intresting to see next year what percentage of PS3 user play on-line matches. Cause I know MS stated that they hit 6 million LIVE users, but never broke down stats for gold and silver accounts. All they said was that 70% of these users used marketplace, and 70% of that 70% downloaded LIVE arcade games. So if they have those kind of stats, where are the GOLD stats, or % of users who acctually play on-line? My guess is that its low, or even the rate at which the original box's LIVE was at. Thats speculation of course.