This week at the annual E3 video gaming conference, Microsoft announced a sweeping set of new products and services for the Xbox 360. Some will ship this year while others, like a vaporware full-body-motion-sensing system codenamed "Project Natal," are quite a bit further out. But give Microsoft some credit for really advancing the state of the art with its console: The Xbox 360 is going to be with us for several more years, and the software giant intends to make it ever more interesting with each passing year. Here's what the company announced.

"Project Natal"

Microsoft's biggest news-maker at E3 this year, for some reason, was an upcoming "non-controller" that's currently codenamed "Project Natal" (and pronounced "nuh-tall" and not "nay-tell"). That this thing doesn't yet even have a name let alone a projected release date should have caused some concern among the fawning video game press in attendance at the keynote. That it is also quite clearly inspired by the success of the Nintendo Wii's motion-sensing hand controllers might have also raised some eyebrows. It did not.

Project Natal will ship as a hardware accessory for all existing Xbox 360 consoles. (And will conceivably be bundled with, or integrated directly into, future 360 boxes.) This accessory currently resembles a huge version of the Nintendo Wii's controller sensor (go figure) and includes an RGB camera, depth sensor, multi-array microphone and custom processor.

Xbox 360 at E3 2009

The device tracks your full body movements in 3D, according to Microsoft, and can respond to commands, directions, and even (supposedly) to shifts in emotion in your voice. Consider how the device might be used in a football game. You could call plays with your voice, or physically "kick," "throw," or "catch" the football. To logon to Xbox Live, you just stand in front of the sensor.

Project Natal makes for good demo. But seriously, folks. This is vaporware at its finest. We can discuss this device when it's closer to reality. For now, I remain completely unconvinced. And if you really believe we're going to see any of the baloney shown in this video anytime soon, well. I feel bad for you.

Zune

A week ago, Microsoft revealed that it would be integrating parts of its Zune service into the Xbox 360 (See my Zune HD Preview for details). At the E3 keynote, the company expanded on those plans a bit, showing off the user experience for the first time and touting an "instant on" 1080p video streaming capability.

The Zune integration is a bit underwhelming in this initial incarnation, mostly because it does nothing to bring the Zune PC software's excellent interface to Microsoft's video game console. In the New Xbox Experience (NXE), the first panel in the Video Marketplace menu is being changed from a green "Explore Video Content" block to a dark gray "Zune" box, which isn't exactly a huge change. And as you dive in, while there's been some change in the arrangement of items, it's basically the same system, just replaced with a dark gray Zune background color. (The Zune menus appear to be graphical no matter where you are in the UI, whereas in the current UI, you can eventually hit a textual list.) When you select a movie or TV show in today's interface, you're typically presented with a choice to rent/buy in standard definition, rent/buy in high definition, or watch a preview. You can also pan over to learn more about the movie.

Xbox 360 at E3 2009

Xbox 360 at E3 2009

Under the new Zune interface, this doesn't change per se, but Microsoft is adding a new "instant on" HD streaming capability, sometime this fall, that will allow users with fast Internet connections to begin streaming and watching a 1080p movie with 5.1 surround sound nearly instantaneously. This isn't so much a Zune feature as it is just a new underlying capability, of course, and it will presumably be accompanied by an expansion of available content. (It's not too shabby in the current incarnation but pales in comparison to what's available via the iTunes Store on Apple TV.)

Xbox 360 at E3 2009

On a related note, though this is also not technically a Zune feature, Microsoft is adding a feature to the Xbox 360 that allows users to create Xbox Live Parties that consist of two or more subscribers who simultaneously watch the same movie. Your avatars will all share a virtual theater, which you'll see surrounding the actual movies and you can interact verbally during the show via your Xbox Live headsets. I can't think of anything more annoying, but as you can see, it does nostalgically recall Mystery Science Theater 3000.

Xbox 360 at E3 2009

Just getting the Zune brand over on the Xbox 360 console is a great step, but I'd like to see the Zune's biggest strength--its music management, discovery, and playback functionality--ported over as well. Hopefully that will happen quickly.

Social networking and music service integration

In a surprising move, Microsoft announced that it would allow Xbox 360 users to access two popular social networking services, Facebook and Twitter, as well as the last.fm music service, from the Xbox 360. Facebook users will be able to update their status, share photos, and post game updates and screenshots directly from the console, though the game-related features will need to be specifically supported by individual game titles. (So the next time I score 456 points in a Call of Duty World at War team deathmatch, I won't be able share it via Facebook unless the game developers goes back and adds that support. Which is highly unlikely.)

Xbox 360 at E3 2009

Microsoft is also integrating Twitter with Xbox Live, so you can "follow friends and celebrities" on the service, find out about news as it happens, and post updates of your own. Few details about this integration were provided, however.

Xbox 360 at E3 2009

Last.fm compatibility means that subscribers of that service will be able to stream its catalog of millions of songs via the console for the first time.

Continue to Part 2...