2. Hand-Held Consoles
Yes, hand-held consoles. If Microsoft wants to leap ahead of the competition, they will have to compete with them in every aspect. By releasing a hand-held console (like the PSP), they have another channel of revenue which they can use to better their gaming consoles. I'm certain games like Fable and The Elder Scrolls would work great on a hand-held Xbox console. People will be able to enjoy Microsoft's creation wherever they may be. There is a downside to this, however - if Microsoft decides to do this, they will have to compete with an already-established market. Adding features that the PSP doesn't have such as HD TV connectivity, the ability to use the console as a cell-phone (a little far-fetched, I know), and real-time updated achievement features would make the console a lot more competetive.