D'oh, that's the most obvious example and I completely missed it. Even then, they were somewhat hamstrung by weird decisions - RROD as mentioned, but also remember their hard drive/memory card scheme for the 360? They HAD their family room Trojan horse, at the nascence of streaming and HD broadcast - imagine if they had gone full Nintendo and pushed a TV tuner and/or integration with cable networks? Truly an Xbox, the only one you need under your TV.

It's crazy how the corporate machine just chews up obvious courses for sustained profitability and customer delight and spits out expanding batteries and DRM.