In January, I commented on Joystiq about the significance of services for consoles in this generation and even moreso in the next–something far more significant, in fact, than the next gen graphics that have consumed console and gamer discussions for the last three years.

Gaming doesn’t occur in a vacuum, despite our closing our doors as we indulge in hours of gaming. Although I’m on board with Jon Stewart and his derision of twitter, social networking is but one aspect of what’s happening with the Internet, as we’re seeing on-demand in greater quantity, and mashups of services. We’ve known about the idea of gaming consoles as multimedia centers for a while, but sometimes, it takes time or several attempts to get it to work. And I think time is the key because often innovations require a certain threshold of users before it gains the attention of mainstream users.

For example, about 8 years ago, I tried AT&T’s cable tv/internet/phone package. And it failed miserably, both on the service level [and boy, was their service atrocious] and among the public–it was just not something that people saw as a benefit. Today, that is a different story, as Verizon and others are succeeding in packaged services.

When my wife bought me a 360, she thought it was just for me. Similarly, I bought the Wii for the kids. And they were both for gaming. Yet, the 360 sees more non-gaming activity today because we use it to watch movies and shows via Netflix and Playon, and I use it [when the 360 decides to work with my router] to talk to my brother rather than the phone. We use the Wii for Wii Fit exercise, checking the news, and even surfing the web.

Even though it might not have the range of services as the 360 [at least, outside of Japan], the Wii is perhaps a key on service implementation. For one, it is a far more popular console and has the ability to push new products and services to more people than the 360. [I'm not saying by any means that the 360 is the innovator and the Wii is a popularizer.]

Second, as restrictive as Nintendo can be, it has created a far friendlier, more customizable interface. Several years, when I taught technical writing, I had students conduct usability tests with older users and telephones, and we found that one of the key problems of phones is that their controls were too similar yet too different from other devices, causing confusion. The underlying design metaphor is critical in user satisfaction. This past weekend, my wife was trying to find a movie and became very frustrated with the 360 interface–the new one–because it separates Netflix, videos on our local network, and Microsoft’s own video offerings. Too many things, too many similar things, and too little customization. Even though Microsoft call them ‘channels,’ the metaphor is weak, at best, especially with an interface that has 3 tiers. The Wii has a very flat interface. And there’s only one place to configure the system [unlike the 360]. But the flat interface allows customers to organize the channels on their own, grouping similar channels however they define them. The Wii menu could use a lot more work, but the underlying design principles are the right ones.

Third, Nintendo has shown that less can be better. The Wii console itself is compact. It’s cheaper. The basic controller has just 6 buttons compared to 12 for the 360 controller, not to mention that it looks more like a remote control. The Wii in a way represents less of a physical console presence than the 360 or the PS3. As such, it’s closer to the idea of a thin client, which is where I think gaming services are heading or should head.

The point isn’t to argue who has the advantage; instead, I’ve tried to point out what the consoles are doing and need to do. I think the thing none of them have done well is to offer more dynamic functionality. With computers, we see new services pop up all the time, and we simply enter a URL to use them. With game consoles, we are much less able to do that. We have to wait until Microsoft, Sony, and Nintendo decide that the services are worth rendering to their respective products. As such, the current consoles are decidedly last gen and ‘web 1.0.’ Yet, even in their flawed current models, they can do more, can offer us more ‘web 2.0′ features that involve information sharing, collaboration, interoperability, and hosted services.

I received a notice last week that I was accepted to test the new Xbox interface [nxe]. While I don’t hate it, the new functionality is the only good change. The new avatars and the new navigation format are at best not any worse than what 360 owners had before. The interface is now organized as ‘channels’ which are nothing like the Wii channels.

It takes a few passes to understand the differences among the different channels. The Welcome channel can and should be hidden after you initially log on. It has no real value, except to guide you at a high level through the new features.  But here is my list of the pros and cons of the new interface and features.

Bottom line: The new features are great, but the overall design is not very good.

positives

• The Netflix channel works great and is probably the best feature in the new design. The video looks great.
• Though i’ve not used it, the party feature is a great way to talk to 2+ friends at one time.
• While the ability to copy a disk didn’t speed up loading my games that I could tell, it does prevent that horrid cd drive noise. [However, if you have 20 gigabyte drive, as I do, you'll only be able to copy 2, maybe 3 games, to your drive.
• The avatar creator is actually okay, although we have seen so many that the creation interface is almost a given design. But Microsoft offers some nice features, like different clothes and accessories.
• Those old themes you paid for are still usable as wallaper for the new interface.  But they don't interfere with reading anything.
• The advertising spotlights are now all in one channel. In the old interface, some ad spaces were not clickable so you couldn't easily find out more information about the game or event. That's no longer the case.

negatives

• After hiding the Welcome channel, the default channel isn't the most useful channel [My Xbox] . . . it’s the Spotlight channel.
• You cannot edit your Instant Movie queue for Netflix, which means you have to manage it from a PC.
• Some features are not easy to find. Go ahead  . . . find where you would change the dashboard theme. I spent 10 minutes searching for it and had to repair myself to google. No, it’s not in the System Settings menu.
• You can only see 3 friends at a time in the friends list. The new interface is just not good for some things, like viewing a long list. If you’re like me and have just a handful of friends, it’s not too bad. You have scroll a couple of times to see everyone. But if you have 12 or more, the Friends channel is quite useless. The best way to view your friends’ status is to use the big Xbox button and view your friends in an old fashioned list. [To be fair, friends who are online are moved to the front of the channel.] But overall, the friend channel is dominated by big, clunky graphics that don’t provide any extra information and are just there to look pretty, which you’ll get tired of in about 1 minute.
• For those expecting Microsoft to beat the PS3 ‘home,’ they didn’t do it. The Xbox avatars are all in all just barely there. See the following list.
• The avatar creation, all in all, doesn’t compare with the Mii creator. You can’t finetune the facial features, so you’re not going to see Spider-Man, Darth Vader, Obama, et al. here.

What Microsoft missed

• Customization. While the Wii Menu isn’t completely customizable, it does allow gamers to rearrange channels to put what they use the most up front. Microsoft focused on copying the Miis but completely missed this small but gretaly useful feature. Maybe I’m not interested in Events and Spotlight ads so let me hide them.
• After going to some work to create an avatar, where does it get used? The friends channel is it, and even there, it’s not much. Microsoft couldn’t have given even a small game to use them in? Couldn’t have one-upped Nintendo’s Mii Channel? [While creating your avator, using the left joystick, you can make your avatar look disoriented or angry. It's interesting that they design this kind of interactivity in the avatar but don't really take advantage of it.]

What is good in the new 360 interface is great. But the majority of it is either a step to the side or, in a few cases, a step backwards [either from what 360 owners had before or from what other console owners have]. I applaud Microsoft for the willingness to start over on some of their products, to copy what’s good in their competition and to even introduce new functionality.