It’s a Gaming Console! It’s an Entertainment Hub!

And believe it or not, Microsoft’s new Xbox 360 plays both roles really well.

The gaming world has changed a lot since the launch of Microsoft’s first Xbox in 2001, when the company charged an extra $30 to consumers who wanted their system to double as a


DVD player. Just how much became clear with a glance around the room at a recent demo of Microsoft’s latest gaming console, the Xbox 360.

Behind the dozen or so systems outfitted with the latest games was a faux living room meant to highlight the 360’s central role in a home-entertainment system–a conceit Microsoft has been talking up for months. It’s not alone: Sony has announced that its next-generation PlayStation 3, expected next spring, will be able to play high-definition Blu-ray DVDs.

Fortunately for us, Microsoft’s convergence strategy turns out to be more than just PR hype. The company has finally begun to acknowledge that, if it really wants to be at the center of our digital lives, it has to design its products to play nicely with others. Case in point: I was able to plug my Apple iPod directly into the 360 and use it to create custom game soundtracks. The 360 can also double as a “dock,” enabling you to play music stored on an iPod (or other portable players) through your stereo system, even when you’re not taking on alien invaders. Likewise, it can display pictures and run slide shows directly from many digital cameras.

Enlightened ecumenism aside, Microsoft hopes its new console will ultimately boost sales of high-end PCs running Windows Media Center software. And here again, the technology holds water: The 360 can stream home movies, digital music, and nearly any other audio or video content stored on a Media Center PC. All the audio and video features are easily accessible using a remote control that comes with the $399 version. (A $299 bare-bones unit leaves out many peripherals, including the remote, a wireless controller, and a hard drive.)

But when you’re done listening to music and watching movies, how is the 360 as a gaming machine? Pretty darned impressive. It offers much better graphics and sound than does the current generation of consoles, and all Xbox 360 titles will be released in 720p and 1080i high definition (they’ll work on standard TVs, too; they just won’t look as good). The detailed cityscapes of Project Gotham Racing 3 were so accurate that I repeatedly crashed my Ferrari into the guardrails as I admired them. At least that’s what I told the 23-year-olds in the room.