Repost from my TXB response:
I have mixed feelings about all of this. I own all three consoles, so I don't really have much to lose no matter how any of this turns out.
I understand that Microsoft wants to appeal to the mass market, because Nintendo has done so disturbingly well there. I would say that, even though I'm not terribly attracted to these things, they're a step towards that goal. So, from that perspective, it's a good thing, and Microsoft should keep it up.
In particular, LIPS is probably a necessity, given how well Singstar does in Europe. I'm a little annoyed that they couldn't have used the headset mics for this kind of thing, but perhaps they don't have enough bandwidth, and maybe they found that full-out microphones are somehow more appealing to casuals.
I would find it quite impressive if they were gutsy enough to offer up a 360 Arcade with no wireless gamepad or arcade games, but instead had a remote control, the Scene It! kit, and the new LIPS gear. Face the facts, folks: gamepads scare people. A trimmed-down new interface for casuals would also be good - the blade is awesome, but I think something more task-oriented (ala the Wii's dashboard) would appeal more to them, especially in combination with the IR remote control.
Avatars are nice, although implementation is going to be key here. I could easily foresee avatar-centered XBLA or community games, which is bizarrely something that never happened on the Wii (at least so far). That is to say, instead of an all-encompassing Home, you would have smaller, more focused experiences (nothing stopping someone from writing the "Avatar Neighborhood" sandbox game, though!).
As for the Forza 3 news, if it's true, all things equal, more Forza is always a good thing.
That said, I feel as if Microsoft is indeed missing the boat on social gaming because of their continued non-implementation of _larger_ group structures. I'm not a clan / guild guy - I don't do my gaming in well-organized groups. But there's no ignoring that, in many MMORPGs, guilds are HUGE, and the same goes for clans in FPS games. In fact, it's true even in non-gaming realms - look at how popular groups are on Facebook. These groups don't necessarily need to be hard-core or game-specific, but should allow for some organization-level hierarchies, flexible privileges, titles, game specificity, etc.
I can see why Microsoft would be worried about putting in support like that - there's always a chance that the hard-core groups would wind up driving off the more casual players. But careful design (eg, designating organizations as competitive or non-competitive, and match-making accordingly) could alleviate some of these concerns. And, really, allowing for casuals to organize more easily could turn some of them into the hard-core - the folks who are buying more games and peripherals.
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