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Remember back in November when Thomas Hawk (yes, that's me) wrote that the XBox 360 would represent Microsoft's (NASDAQ:MSFT) Trojan Horse (in a good way, not in a virus way) in your living room?

Yesterday Microsoft took one step closer towards its master plan of living room domination with the powerful secret weapon in its popular XBox 360 gaming unit, the extender functionality. Microsoft announced the upcoming availability of the XBox 360 Elite which will include a 120GB hard drive and will increasingly be marketed and positioned as an entertainment hub, even more than a gaming machine.

And I have to say it's brilliant. I'm glad to see Microsoft taking a more aggressive position with regards to the XBox 360 as a home media distribution platform. I'm sure that in part this marketing message has been crafted to counter Apple's (NASDAQ:AAPL) recently released iDongle for your TV.

XBox 360 vs. AppleTV
So what's the major advantage that XBox 360 has over AppleTV? It's simple really. 90% of it comes down to HDTV. People continually underestimate the importance of HDTV. Microsoft is much further ahead than Apple in the ability to deliver HD content to your living room. Apple's picture quality looks like crap. And there seem to be no obvious plans for Apple to begin offering a cable/satellite based DVR solution for its Apple TV initiative anytime soon.

Microsoft, on the other hand, will very shortly have available new Vista machines (and upgrading with a new PC is probably the best way to upgrade to Vista) that work with CableLabs- approved HDTV tuners. These HDTV tuners will allow you to record premium HDTV content from your cable provider to your Media Center PC, and then ship this high quality programming to any TV in your house equipped with an XBox 360.

Let's Talk Value

What's more, best I can tell, there will be no additional charges from your cable company beyond the typical service charge to distribute to multi rooms in your house. At present, although Apple may be sexy and have marketing and advertising prowess that Microsoft can only dream of, it just can't compete with the superiority of the XBox 360 as a home media hub.

And even if you don't want HDTV, the XBox 360 will work with any XP or Vista machine equipped with a standard definition TV tuner. Since most people already pay a cable or satellite provider for TV service, recording this content on your Media Center PC involves very little additional cost. Getting this content to your living room without having to buy it and pay anything additional to iTunes represents real value.

Although a lot of people talk about a la carte pricing being better than cable or satellite monthly bills, very few people are abandoning their cable or satellite provider yet. And because the Media Center PC/Xbox combo can use your existing cable or satellite signal your content effectively becomes free vs. paid at Apple.

On top of it all, the XBox 360 is a kick ass gaming platform. I never thought I'd appreciate this as much as I do now that I own one.

Source: Microsoft Gets Closer To Owning Your Living Room