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The other Microsoft-Apple battle

Don Reisinger thinks the other Microsoft-Apple battle is just as important the OS war. Are the Apple TV and Xbox 360 really that important?

Everyone likes to talk about the battle between Microsoft and Apple on the OS front, but that seems like old hat to me. Sure, there's certainly a battle being waged in that space, but is it really as hotly contested as some want to believe? Call me when Mac OS X hits 20 percent market share.

Xbox 360
The Xbox 360 is the Apple TV killer Microsoft

But there is one battle raging between Apple and Microsoft that many people don't even see. No, it's not in the MP3 player market where the iPod reigns supreme, it's in the home entertainment business. More specifically, the battle being waged pits the Apple TV against the Xbox 360.

Now I know what you're thinking -- "isn't the Xbox 360 a video game console and the Apple TV is a media device"? Yes and no. The description of each device may be correct, but the Xbox 360 description doesn't say enough about the console. Aside from its gaming capabilities, Microsoft's product performs many of the tasks already found on the Apple TV -- streaming entertainment, music, movies and TV show viewing and a hard drive that can store your favorite material.

And with an installed base of over 18 million that easily eclipses the Apple TV's 1.7 million installed base, there's no reason to suggest Microsoft can't win the battle and finally deal the Apple TV its death blow. And here's how it should do it:

Xbox Live Marketplace is an extremely compelling feature on Microsoft's console. Unlike every other console to-date, you have the opportunity to acquire and enjoy movies, music videos and TV shows. Right now, the service has over 300 movies to watch on the marketplace and well over 340 options for TV shows.

Realizing this, why hasn't Microsoft done more to promote the Xbox Live Marketplace and contend that it's a place for people to be entertained without the need for DVD players, extra set-top boxes or even Apple TVs?

Perhaps it's because Microsoft is in a strangely dangerous position. And to make matters worse, the company doesn't want to create an identity for its platform that mimics Sony's mistake when it tried to make the Playstation into more than a gaming console.

In the gaming industry, hardcore gamers usually don't respond well to consoles that try to do too much. Let's face it -- before Sony told the world that the Playstation 3 is really a gaming console, gamers looked at all of its features as the center of the home and asked why they would pay for something that was overpriced and didn't focus enough on gaming.

Aside from that, the Wii is a fantastic case study that shows exactly what the gaming industry is all about. Instead of outstanding graphics or TV shows, most gamers decided that games are the most important element of a video game console and went with the Wii. Left in its dust was Microsoft and Sony -- the two companies that wanted to do more than gaming.

So what's really going on? Is it that people want to only play games on their consoles or is it simply that Microsoft has been incapable of promoting its services better? The answer is probably a little bit of both.

Hardcore gamers are most likely to play games and not worry about TV shows or movies. But as the Xbox Live Marketplace continues to grow, the casual gamers and less-hardcore players will find something they like and propel the service to a more important standing in the business. But alas, word of mouth won't be enough for Microsoft if it wants to supplant the Apple TV and every other media extender in the business.

Instead, it should start promoting the Xbox 360 as the Apple TV of gaming. Instead of ignoring it and watching it grow organically, Microsoft needs to find a way to jump start sales and marketing may be its best bet. Let's face it -- most of the future Xbox 360 owners are looking for something more than gaming and Microsoft is the only company that can provide it.

If nothing else, the Apple TV has shown that some people want the kind of functionality it provides. But if given the chance to eliminate one box in their home entertainment center in favor of an Xbox 360 that does everything an Apple TV can do, wouldn't people choose to do just that?

Microsoft is on to something with its media extender capabilities and the Xbox Live Marketplace. But until it starts telling the world that its console can do everything an Apple TV can do, it'll be the forgotten platform in a growing market. And when the market finally booms, Microsoft could be behind the pack if it doesn't change its tactic and get moving.