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Can Microsoft's XBox Dethrone Apple's iTunes?

Microsoft is pushing to make the XBox the entertainment hub of the living room.

Source: Microsoft

In a flashy E3 presentation Monday, the console-maker also unveiled a new "XBox Smart Glass" technology designed to integrate and sync any second screen — a smart phone or tablet — with the XBox, to make game play or watching a video more interactive and immersive.

For a year with no big announcements about a new console, Microsoft pulled out all the stops — bringing Usher and Joe Montana on stage — to show gamers the kind of high-tech play its Kinect motion-sensor technology enables.

One of Microsoft's biggest announcements was its big push to embrace the "second screen" — all those smart phones, tablets and laptops consumers regularly use when watching TV.

XBox's new "SmartGlass" app will eventually work with all devices — even iPhones and iPads — to "bring XBox beyond the console" while making the capabilities of the console cooler (for lack of a better word).

While Nintendo's new WiiU includes a special controller that looks like an iPad, this technology turns your tablet into a controller. This is paired with the news that Microsoft is finally bringing a browser — Internet Explorer, of course — to the console. Addressing the issues that "no one is using browsers on consoles" and that "keyboards don't belong in the living room," the new technology looks to make it easy to navigate the web — using motion- and voice-sensor technology, from the comfort of a couch.

Another surprising announcement: Microsoft is taking Apple head-on with an iTunes competitor. Starting this fall, XBox will offer "XBox Music," with 30 million songs — just a bit smaller than Apple's catalog. And it won't just compete with iTunes, it's also going after Spotify with a subscription service.

Why? Microsoft's president of interactive entertainment, Don Mattrick, says he thinks they can simply offer music best, and that people want to access music on their consoles as well as on smart phones, tablets and PCs.

This music announcement builds on Microsoft's push to make XBox the entertainment hub of the living room — last year it added 200 million new movies, videos and other pieces of entertainment. Today, the service added content from Nickelodeon, movies from Paramount, and videos from Univision and Machinima, plus more than two dozen others.

But perhaps most interesting is the addition of more live sports content. XBOX expanded its access to live ESPN content — now subscribers to ESPN's app can access live video 24/7. And for the first time they can access live video through NBA and NHL apps as well.

In yet another partnership, XBox is teaming with Nike to take advantage of the Kinect's motion-sensor technology to offer custom training through a video game.

-By CNBC's Julia Boorstin
Follow Julia Boorstin on Twitter: @JBoorstin

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