"This annoyance comes to us via reader ChicagoOne, who sent us the following tip: “Come on Microsoft, you design the “standard” media format, but now the only way we can watch our WMV-HD flicks is to use a media center pc? My guess is the software is in the box, but we will have to pay for the right to pop in a disc later…”

ChicagoOne has pinpointed a very annoying aspect of the Xbox 360. We know that Microsoft needs to encourage people to buy Windows Media Center PCs. Someone, somewhere inside Microsoft is rewarded based on sales of this flavor of the Windows XP operating system and that certain someone successfully convinced or forced the Xbox 360 product team to cripple the functionality of the Xbox 360 to limit the threat to his product. We hate it when companies let internal politics compromise product design. That’s precisely the problem with Sony’s insistence with using UMD and Memory Sticks in the PSP when a standard technology would be far more customer-friendly (but simultaneously more threatening to Sony’s non-gaming business units).

In essence, the Xbox 360 is a crippled digital media receiver (DMR) and as such, it’s hardly the magical hub of the so-called “digital home” (a term that The Economist has called “marketing claptrap”). Instead of accepting a variety of streams from the full array of Windows-based devices, the Xbox 360 is only allowed to receive streams of music and photos from the laptop used to write this post because Windows XP Pro falls to the wrong manager’s profit and loss statement." [more]