Microsoft revealed yesterday that its upcoming Xbox 360 video game and home entertainment system will offer integrated Media Center Extender functionality that will let the device interact with a Windows XP Media Center Edition (XP MCE) 2005-based PC. However, this simple description only hints at the digital media prowess of Xbox 360. In addition to offering a Media Center interface that is, in some ways, superior to that of many Media Center PCs, Xbox 360 will also aggregate content from networked PCs running other XP versions and will directly connect with Apple Computer's iPod, the Sony Portable PlayStation (PSP), and a slew of other portable devices.

In a conversation with Xbox 360 Executive Producer Jeff Henshaw and Windows General Manager Joe Belfiore, I discovered that Microsoft's efforts to extend the Xbox beyond just video games is a years-long effort that saw both the Windows and Xbox teams at the company work collaboratively toward a common goal. "We've put out some big numbers," Henshaw told me. "With Xbox 360, we want to reach one billion customers worldwide. Reaching that demographic requires you to understand that people like to be entertained in different ways. Everyone plays in some way or another. Some people play games. Some play music or card games, watch recorded TV, or view photos. The more types of play you can build in, and the more connectivity you supply, the better your reach will be over time.

"Our goal with Xbox 360 is to make the first consumer electronic device that supports all consumer experiences and does so in high definition," he continued. "It's a combined focus where the two capabilities become really powerful when used together."

Aside from the obvious gaming features, Xbox 360 will support a second-generation Media Center Extender experience that goes well beyond the dedicated Media Center Extenders or Xbox-based software Extender you can use today. First, the new Media Center Extenders will be built directly into Xbox 360 and won't require a separate software disk that you must manually load into the unit's optical drive. This obviates certain limitations with today's Xbox-based Extender kit, which, among other things, doesn't let you turn off the device with the remote control.

The Xbox 360 Media Center Extender will be driven by the remote control that comes with the device. Users must have an XP MCE 2005-based PC to drive the console, and Microsoft will ship a free software update, code-named Emerald, that will update XP MCE 2005 to support the new Xbox 360 features. These features include full HDTV support for both live TV and recorded TV. That means that the Media Center Extenders in Xbox 360 will be able to stream HDTV broadcasts over a home network, a capability today's Extenders lack.

Furthermore, the Xbox 360 Media Center Extender will include the full Media Center user experience, not the stripped-down version seen on today's Extenders. That means you get the full fidelity of the Media Center experience, complete with animations, transitions during photos slide shows, and so on. For many users, the Xbox 360 Media Center Extender will look even nicer than the default UI on a Media Center PC, a first for any Extender.

If you don't have an XP-based Media Center PC, Xbox 360 will use Windows Media Connect technology to interact with the digital media content on your XP-based PCs over your home network. This experience won't be as rich as the Extender experience, but will instead use regular Xbox 360 menus via its "Access Music or Photos" interface. Additionally, you can use this interface to interact with audio CDs or photo disks, music you've ripped directly to the Xbox 360 hard disk, music stored on attached MP3 players, or photos stored on attached digital cameras.

Unexpectedly, Xbox 360 will include direct support for two competing portable devices: Apple's iPod line of MP3 players and Sony's PSP. Xbox 360 will natively support music and photos stored on an iPod, and music, photos, and videos stored on a PSP. "Plug in an iPod or PSP via USB, and we'll give you access to all that content," Henshaw told me. "We'll play it right off of the device. Plug it in and stream that content through your stereo."

Both Henshaw and Belfiore credited the close relationship between the Windows and Xbox teams for making the Xbox 360 the best possible digital hub device. "We're both very passionate about simple and compelling consumer experiences," Belfiore told me. "While the Extender for Xbox was a dry run for this kind of interaction, Xbox 360 is the main show. It was designed from the beginning to do this. We both now have the experience and know what needs work. Hopefully we'll really nail it this time."