In the ongoing quest for a metaphor that illustrates slow versus rapid change, it’s hard to top the boiled frog. You know the one – drop a frog in hot water and out it leaps; place it in cold water and put it on the stove and the frog will sit there and cook. Atlantic writer and one-time Microsoft employee James Fallows has the most thorough debunking of the metaphor extant, but such is the power of the meme that it continues to show up, even in otherwise reputable publications.

For me, the above perfectly illustrates how hard it can be to recognize a transformation, especially when the transformation takes time (also known as slowly turning up the heat). Case in point: Xbox and entertainment. For the last 10 years at Microsoft, we’ve been turning up the heat on how we think about Xbox, and next week at E3 you will get a chance to see how far we’ve come.

Let’s look at the numbers and then take a look at what they mean and what the future holds. Just for starters, we’ve sold more than 53 million Xbox 360 consoles, and Xbox has been the top-selling console in the last year. There are more than 30 million Xbox LIVE members. And more than 10 million Kinects have sold to date. Those are pretty big numbers for a device that, until recently, had primarily been purchased by hardcore gamers. But something interesting has happened in the last few years. While people are still playing a ton of video games, 40 percent of all Xbox activity now is non-game. Put another way, we’re seeing an average of 30 hours of video consumption per month per Xbox, a number that is growing fast. And people are expecting more – more options, more games, more videos, more entertainment.

Here’s a personal example: my daughter talks to the Xbox while watching movies and just assumes it will do as she says. Through the magic of Kinect, she says it, Xbox does it. For her, and millions like her, Xbox is the gateway to games, music, movies and TV shows – in short, it is central to entertainment.

And this is true for Microsoft as well. Put simply, Xbox = entertainment and is core to our entertainment strategy. Around the world, the Xbox connects more people to online content and communities through the largest screen in the house than any other device. And as the console has evolved, it’s stayed true to its core while adding more and more experiences. Today, there is no better gaming experience in the world. Immersive games, sports games, games where you are the controller, games where you talk to your friends, games where you talk to the console, games that get you into shape, that make you laugh, that let you take a picture and share it with friends. Games that extend to your Windows 7 PC and your Windows Phone 7…and, of course, other devices to come…

The vision for Xbox is straightforward: All of the entertainment you want. With the people you care about. Made easy. That is why you’ve seen us invest in partnerships with ESPN, Netflix and Hulu. That is why we’ve baked social directly into the experience with Xbox LIVE – connecting gamers, friends and families across the globe. That is why you’ll see Xbox marketed more as an entertainment brand this year. And that is why we’re investing so much in Natural User Interface technologies (speech, touch, gestures) to make the entertainment experience that much easier—and more fun. With Kinect, we’ve made NUI real for millions of people, and we’ve only begun to scratch the surface of what’s possible.

Next Monday at E3 in Los Angeles, the Xbox home entertainment pot will be boiling over during a 90-minute event that you can view live on Spike TV, Xbox.com or on the Microsoft News Center. We’re continuing to deliver mind-blowing gaming experiences, and we are turning up the heat on a whole new era of home entertainment.

Posted by Frank X. Shaw
Corporate Vice President, Corporate Communications, Microsoft