Images from Apple.com and Xbox.com, photoshopped by Tim Carmody

“The problem with innovation in the television market is the go-to-market strategy,” Steve Jobs told Hillcrest Labs’ Dan Simpkins at D8 in 2010. “It’s not a problem of technology; it’s not a problem of vision; it’s a fundamental go-to-market problem.”

I don’t think Jobs was trying to throw Apple-watchers off the track with a coy answer. I don’t think we’ve taken this problem seriously enough when it comes to the future of television and living-room entertainment. And I don’t think either Apple’s current set-top box approach or the endlessly renewable speculations about a fully integrated big-screen Apple television set solve this problem.

The best approach we’ve seen to this problem, and the best approach we’re likely to see for some time, has been Microsoft’s efforts with Xbox 360. I want to explain why I think Microsoft is beating and will continue to beat Apple in this space. Then I want to outline what Apple would need to do differently in order to beat back Microsoft, Sony, Google and all other contenders if it wants to conquer the living room.

Xbox Is Winning Because of Content, Not Kinect

For me, a light bulb went off when I saw Microsoft’s Black Friday sales numbers for Xbox 360 and Kinect. In the U.S., Microsoft sold 960,000 Xbox consoles and 750,000 Kinect sensors, including both standalone units and bundled with Xboxes.

It was Xbox’s biggest week ever; mighty impressive for a six-year-old game console likely to be displaced by a next-generation model in a year or so. But the total numbers are less interesting to me than the spread between them. It means there are at least 200,000 people, and quite possibly hundreds of thousands more, who are buying brand-new Xbox consoles without Kinect.

As ZDNet’s Mary Jo Foley writes, “who is buying all these Xboxes?” Are they gamers disaffected with the PS3 and Wii? Xbox superfans who want a second unit for the bedroom or basement? Media center shoppers who see the Xbox as an upgrade over the Apple TV or Roku boxes? Or Black Friday crazies who don’t know any better?

The mix doubtlessly includes all of these. But it suggests to me that Xbox’s growing popularity has less to do with Kinect than we might think. The emerging market isn’t being driven by the attraction of new user interfaces. It’s extremely price-sensitive, and it’s fundamentally driven by the availability of content. And that includes content of all kinds, from movies to gaming.

Xbox is selling more units because the available content has gotten drastically better. On Twitter, Joystiq’s Chris Grant writes that “six years after the launch of Xbox 360, we’re seeing games really push the thing: Gears [of War] 3, Rage, Crysis 2. They all look incredible.” And now, software updates bring live and on-demand TV content from both cable programmers like HBO and cable companies like Comcast and Verizon, plus a slew of other features that integrate all this content.

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