How The Xbox Can Save MicrosoftHow The Xbox Can Save Microsoft

That's why branding its new smartphone OS as Windows Phone 7 was a terrible decision. Imagine where the Xbox would be if it had been called Windows Gaming System 2000. That's right, it would be pushing up daises alongside MS Bob in whichever graveyard failed Microsoft products go to die. (“Mr. Zune, you say? Ah, yes, come right in. We have a nice plot set aside for you right next to Mr. KIN.")

Microsoft should have hitched its mobile strategy to the Xbox brand, a move that, just for starters, would have made it a lock with millions of gamers around the world and given it critical mass out of the gate. It also would have created lucrative spin-off possibilities. A Halo 3 phone? Microsoft could have sold a million a week.

It's not too late. I have a feeling Windows Phone 7 is going nowhere, but that doesn't mean Microsoft can't repackage the technology, which is solid, under the Xbox brand. Its tablet efforts also should get as far away from Windows as possible and move to the company's Entertainment and Devices group. Having a lineup that includes the Xbox, an Xphone, and Xslate would finally give Microsoft something to put up against Apple's iPod, iPhone, and iPad trinity.

Just marketing, you say? Maybe, but marketing is indispensible at a time when most IT products are functionally indistinguishable save for the odd bell and whistle. My HTC Windows Phone 7 does pretty much everything an iPhone can do—it even has AT&T's crappy voice quality. But Apple will probably sell 100 iPhones for every Windows Phone 7 device that's sold simply because the iPhone is a cool brand from a company that cultivates mystique.

That brings up what may be Xbox's most valuable lesson of all—in a world of lookalike gadgets, true innovation still pays. The Kinect bar features a camera, audio sensors, and motion-sensing technology that tracks 48 points of movement on the human body. That means players can control on-screen action simply through physical gestures and verbal commands. It's a brand new way to interact with a computer; there's nothing else like it on the market.

Microsoft needs to bring that level of innovation to all of its business lines, from Windows (hands-free PCs?) to search and even the cloud, to counter the notion that it's become a copycat company that takes its cues from Apple and Google.

With the Xbox, Microsoft has its own cool, innovative brand—it's time it started using it for more than just games.