To understand the single, key difference between the original Xbox and the Xbox 360, all you need to know is this: The original Xbox was a pure video game console, dedicated to this singular task. But the Xbox 360 was envisioned as something much more, a set-top box that consumers could put in their living rooms in order to enjoy broader and more general forms of entertainment as well.

That was the plan, at least. In truth, the first several years of the Xbox 360's lifetime were marred by unreliable hardware devices, necessitating the single most expensive consumer electronics warranty repair in history. And the original version of the Xbox 360 was simply too loud, and ran too hot, to make sense in the cramped quarters one finds around television sets. The thing was a little a turbine engine running at full throttle. And full volume.

From a hardware perspective, that all changed in 2010 when Microsoft issued the second generation version of the Xbox 360. Called the Xbox 360 S (and still erroneously called the "Xbox 360 Slim" by some), this new version of the console is far more reliable than the original, and suffers from none of the failures that marred the first version. It's also far quieter, especially when you're not playing a game. So when in use as a living room set-top box, the newer Xbox 360 S consoles are actually pretty quiet. Not silent, but quiet.

With the hardware issues finally behind it, Microsoft began working to evolve the Xbox 360's software as well. And now there have now been four major versions of the Xbox 360 user interface, which is called the Dashboard. The first was a blades-based UI that debuted with the console in 2005. The second was a 2008 update that brought the so-called New Xbox Experience, or NXE. This UI was the first to truly take advantage of HD, widescreen displays, but it was hampered by a weird pseudo-3D effect. So Microsoft updated the UI again in late 2010, to a flatter, Metro-style UI that incorporated elements from its work on Zune and Windows Phone, integrated basic Kinect functionality, and set the stage for this year's transformation.

Now, in late 2011, the Dashboard has been updated yet again. I discussed the actual UI changes in Part 1 of this review, but suffice to say that Microsoft has standardized on this Metro-style design language across all its major platforms, and the Fall 2011 Dashboard Update is meant to provide an obvious familial similarity with Windows 8, coming in 2012, and with Windows Phone. Terminology used on those platforms is carried over to Xbox as well, so instead of "screens" of information, we now have Hubs and groups.

Overall, I think the evolved Dashboard UI is very effective, though I'd point out that it's lacking some key elements of other Microsoft Metro-style UIs, including the ability to customize the top-level screens (excuse me, "Hubs") with pinned and favorite items. But it's attractive and works well with a variety of input devices one might use with the console, including hand controllers, remote controls, and Kinect (voice and/or motion).

But as noted previously, this year's Dashboard Update is really just an evolution of previous UIs, and though it's important that Microsoft is consolidating this stuff to be more consistent, that's not really the big news here. No, the big news is what's happened under the covers. I wrote about the new Dashboard's Bing and Kinect integration in Part 2 of this review. And I wrote about interesting new Xbox 360 features like Beacons, cloud storage, and Windows Phone integration in Part 3. Here, I'd like to focus on the Xbox 360's move into living room home entertainment, courtesy of a wide range of TV and entertainment services that integrate not just with the console itself but also with key related technologies like Bing and Kinect. This change puts the Xbox 360 nose-to-nose with current living room champions like the Apple TV and the Roku 2 Streaming Player. And depending on your perspective, it may in fact put the Xbox 360 ahead.

There is one caveat, however, and it is a huge one, so please read this carefully: Everything I'm about to describe requires a paid Xbox LIVE Gold membership. Everything. That is, in addition to whatever subscription fees you may pay to your cable TV provider or to services like Netflix and Hulu, you will also have to pay Microsoft $60 every year (or more) for the privilege of accessing these paid services--and other services that are free elsewhere--via the Xbox 360. Amazingly, this applies even to Microsoft services. So if you're paying Microsoft $9.99 a month (or $100 a year) for its Zune Music Pass and wish to access that service from the Xbox 360 console, yep, you guessed it, you also need to pay for Xbox LIVE Gold.

And just so we're clear, that $60 per year is the minimum you'll pay. You only get that deal if you pay for a year upfront. Pay by the month and a year of Xbox LIVE Gold will cost you $120 (at $9.99 a month). Pay quarterly and it will cost $100 (at $24.99 for three months). And there are also Family memberships that cost $99.99 a year for up to four users. ("4 for the price of 2," Microsoft says.)

Put simply, Xbox LIVE Gold is expensive. And if all you wanted to do was use this console as an on-ramp to Internet-based TV and entertainment services, I'd have to say it's not worth it. An Apple TV, Roku 2 Streaming Player, or whatever is most likely a better deal (either costs $99 or less and comes with no ongoing fees aside from whatever third party services you choose). No, the reason one might pay for Xbox LIVE Gold is that it provides useful game-related services over and above what's available to members of the free version of Xbox LIVE. And, if you're a gamer and love the Xbox 360 because of that, you also happen to get these other entertainment-related options as a nice side-benefit. 

And since we're talking about cost, please remember this little inconvenient truth: The Xbox 360 does not come with a viable remote control of any kind, so you'll need to factor that into your calculations. (Apple TV, Roku 2, and every other set-top box you can think of comes with a simple remote.) Microsoft sells an Xbox 360 Media Remote, which is decent, for $20. There's an Xbox 360 Messenger Kit, which extends the controller with a decent mini-keyboard for $30 (but doesn't provide better media navigation facilities). Or you can buy the Kinect and use its motion control and voice control schemes ... but only for some stuff. And that costs a hefty $120, or $100 with a console bundle. Yikes.

OK, still with me? Not turned off by the egregious Microsoft vig on Xbox LIVE or the fact that the Xbox controller is, at best, a poor substitution for a real remote? Then here's what you get right now, with the understanding that these services are evolving over time and new services are coming online fairly regularly. By this time next year, I expect the list of available services to have grown exponentially. And of course, they vary by region and locale: I can only review the services that happen to be available where I live.

(Note: Some of these services are not new to the Fall 2011 Dashboard Update. My goal here is to provide an overview of what services are available, since many potential users probably ignored or dismissed the Xbox 360's non-gaming features previously.)

Social network integration

Microsoft provides integration with the two most popular consumer-oriented social networking services, Facebook and Twitter, providing ways to connect with your friends on an HDTV instead of the smaller PC and smart phone screens you're currently using. Via the Facebook integration, you can view photos, status updates, and comments that are posted to the service and interact with others who are using both Facebook and the 360. The Twitter integration is similar, allowing you to display your Xbox LIVE information (such as your Gamertag) with your Twitter updates. Again, the idea here is that people using both services can now interact and play games or enjoy interactive entertainment together.

You can obviously post (or "tweet") to both services from the console, but only the Facebook app offers a truly immersive, full-screen service experience. (The Twitter interface requires manual refreshes and provides no way to save searches and do other useful things.) In fact, this is a pretty good way to access Facebook. I particularly like the photo slideshow functionality.

In addition to the services everyone has heard of, the Xbox 360 also provides its own social networking solution called Video Kinect. As the name suggests, this requires a Kinect motion-sensor add-on, but the resulting video chat capabilities are pretty impressive. You can perform video chats with your Xbox LIVE friends, with your Windows Live Messenger (Microsoft's PC-based instant messaging service, also integrated) friends, and use a fun option called Avatar Kinect to perform Avatar-based chats in virtual environments, where each person's onscreen avatar mimics their head and arm movements and even some facial expressions. The latter option is a bit laggy, but assuming you've got the patience to set it up right and a big enough room to pull off using Kinect effectively, it's a lot of fun. 

TV services

While there are various online services catering to online TV show streaming, such as Hulu Plus and Netflix, this category instead refers to cable and TV provider integration. In this US, this means Verizon FIOS now and Comcast Xfinity in early 2012. But regardless of your location, the important thing to remember here is that these services require you to have a current cable TV (or similar provider) subscription. And these services can only be accessed from home: You won't be able to logon to someone else's Xbox 360, elsewhere in the US or abroad, and access your cable TV provider's Xbox LIVE services. They literally check at runtime to make sure you're a current subscriber.

As such, you may be wondering what the point is. Actually, I find these services--or at least the FIOS one I can access--to be very useful indeed. And that's because they an interesting subset of your full TV services for secondary TVs around the house. This can be great for bedrooms or whatever, and is certainly less expensive than paying the cable company for another cable box and remote each month. And in my case, what I get through FIOS is pretty valuable, and will soon be geting better. Your mileage may--no, will--vary depending on which service you get.

FIOS. With the current version of the FIOS app on Xbox 360, you get access to a small subset of the available TV channels. These include standard definition (SD) versions of CNN Headline News, DIY, MTV2, The Movie Channel, Hallmark, TV Land, Nick Jr., Cartoon Network, and BOOM, as well as HD versions of TNT, TBS, Spike, ESPN News, CNN, Food TV, HGTV, Travel, truTV, Comedy Central, MTV, VH1, Nick, and BET. If you're an HBO/Cinemax subscriber, you also get HD versions of HBO, HBO2, and Cinemax.

There's an attractive Metro-style program guide (that looks nothing like the Media Center guide) that works fine with controller, remote, or Kinect. And closed captioning--crystal clear, beautiful, closed captioning--is available all around. Picture quality, alas, is not up to the standards of, say, Zune Video streaming, which provides gorgeous 1080p quality; here, even HD shows have a washed out, You Tube-like blurriness/smoothness to them. Not horrible, but not great. And the on screen controls are minimal.

Today's version of the FIOS app is a bit limited in that it only includes some live TV content. My understanding is that a future update will provide access to FIOS' voluminous On Demand library of content. Such an addition would put this service right over the top. But even now, it's pretty darn good.

In other areas: 4 on Demand (C4, in the UK), ABC iView (Australia), DIGI+ (Canal+, Spain), MUZU.TV (many European countries), and others are available now.

Coming soon: Comcast Xfinity and HBO GO are slated to go live in early 2012, Microsoft says. The Xfinity app, alas, will be live TV only, with no On Demand component.

Video services

While most Xbox LIVE subscribers will have access to just one cable TV service--or none at all in many cases--the number of video services is already big, and it's going to get bigger over time. Here's a sampling of what's available already.

Daily Motion. This You Tube-like video sharing service is the second-biggest in the world, apparently, after Google's offering. It's free and works with Kinect.

EPIX. This service has two components, a premium cable channel with On Demand (similar to HBO) that is available via some cable carriers, and an online subscription service that lets you play HD-quality movies on compatible devices. So it's not available to everyone, though I see I do have the option on FIOS. The Xbox 360 app is Kinect compatible.

ESPN on Xbox LIVE. Debuting last year, ESPN on Xbox LIVE provides Xbox 360 users with live and on demand sports content. The live stuff is pretty much limited to certain ESPN3 events, and the on demand content is mostly clips, but it's Kinect compatible and the video quality is good.

Hulu Plus. After Netflix, Hulu Plus is probably the second best-known on demand TV and movie subscription service, and it arguably still has a better selection of TV shows, though that could have changed. This app requires a Hulu Plus subscription, which costs $7.99 per month, and can't be used with a free Hulu account. Closed captioning is available on some content and the video is often in HD quality, and it utilizes the same HD streaming technology found in Zune Videos. Hulu Plus is Kinect compatible. But on the downside, as on the web, some content is accompanied by limited commercial interruption. Even though you pay for the service. Twice. Sigh.

NBC Today. This free app provides popular clips from the show, with closed captioning and Kinect compatibility.

MSN MSNBC. This free app provides popular clips from MSNBC, the cable TV news station. It also has (spotty) closed captioning and Kinect support. And ads.

Netflix. The premier on demand video streaming service requires a paid subscription but has dramatically more content that other services like Amazon Prime Instant Videos (which curiously isn't on Xbox LIVE) and Hulu Plus (which is). Netflix now features a brand new UI, closed captioning, and is Kinect compatible. 

SyFy. The horribly renamed Sci-Fi Channel offers a surprisingly weak lineup of webisodes, clips, and behind-the-scene videos of favorite science fiction shows like "Battlestar Galactica." All that's missing is the actual shows.

TMZ. This is a celebrity gossip service, so I'll just ignore it and never have to worry about wishing for minutes of my life back.

UFC. Ultimate Fighting Championship comes to the Xbox with clips and on demand, pay-per-view fights. Video is HD qualty and it includes Kinect voice control support, but not closed captioning. 

Vudu HD Movies. This service claims the world's largest selection of HD movies, which you can buy and rent often before they're available on other services. (HD TV shows are also available.) What sets Vudu apart from the competition is that you only pay for what you watch, and movie rentals start at as low as $2 per rental for two nights. That said, new blockbuster movies can be much more expensive: Rise of the Planet of the Apes is now $4.99 for the (720p) HD version or $5.99 for what's called HD-X, which is of course 1080p with Dolby Digital Plus 7.1 surround sound. The Vudu app for Xbox 360 looks great, but I don't see closed captioning anywhere, which is a letdown. It is Kinect compatible, however.

You Tube. Google's ubiquitous video service gets the Xbox treatment. Note, however, that you cannot control this app with voice (Kinect): Only controller/remote control and Kinect motion control is available.

Zune Videos. The only major video service that's been on the Xbox 360 since day one, Zune Videos offers a la carte access to individual TV shows and movies, and any content you've purchased in the past can be streamed--in stunning 1080p HD video if you purchased that version--at any time, on the fly. Zune doesn't get a lot of respect, but this service is pretty decent, with Kinect support of course. All that's missing is closed captioning.

In other areas: LOVEFiLM (UK), BlinkBox (UK), and many other video services are available in other markets.

Coming soon: Crackle, MLB.TV, VEVO (music videos) and others are coming in early 2012.

Music services

Xbox doesn't have Pandora, Spotify, Rhapsody, or any other tier-one music services (yet?) but it has a few decent music services, and of course support for Microsoft's under-appreciated but excellent Zune Music Pass.

iHeartRadio. This personalizable Internet radio service provides access to over 800 of the most popular live broadcast and digital-only radio stations from 150 US cities. You can find stations near you automatically or search for your favorites stations no matter the location, and save the ones you like the most. And as with services like Pandora or Spotify you can create custom stations based on favorite artists or songs. Full Kinect support is available.

Last.FM. This UK-based music service provides recommendations based on your listening habits (called scrobbling), Internet-based radio stations, concert information for your favorite groups, and more. The service is free but ad supported and is fully Kinect compatible. In a nice touch, the Now Playing screen features some decent artist photography. 

Zune Music. The Xbox 360's original music service is still excellent, especially if you're paying for the Zune Music Pass subscription. It provides access to the Zune Music Marketplace, where you can find and preview music and music videos. Or, with a Zune Music Pass, you can stream anything from the entire Zune collection, or utilize Smart DJ for smart playlists, a new Smart VJ for (mostly low quality) smart music video playlists, and share musical likes over Zune Social. You can pin artists, albums, and songs to the Music Apps sub-page too. The Zune software was thoroughly overhauled last year, and while some bits of that remain here, check it out if you haven't in a while as a lot has changed yet again.

Coming soon: VEVO (music videos) is coming soon, according to Microsoft.

Final thoughts

With the Fall 2011 Dashboard Update, Microsoft has turned the Xbox 360 into a credible contender in the living room, an alternative to the Apple TV that offers a much wider range of content. Sadly, that content comes with a price: You must maintain a yearly subscription to Xbox LIVE to take advantage of any of these new features. 

I find it a bit odd that Microsoft hasn't updated its built-in audio and video players and network browsers at all in over six years, and that these players don't support industry standard captioning technologies for videos. But the Xbox 360 TV and entertainment advances are geared towards real people and their needs, not the hobbyist community. It provides most, but not all, of the services that make sense and are popular today, and it does so in generally consistent and attractive ways.

Is the Xbox 360 the right choice for you? Ultimately, that will depend on which services you depend on, I suppose, and whether you're already using an Xbox 360 for video games and, preferably, paying for Xbox LIVE. If so, be sure to spend time checking out each of the services that are available in your area. There's some surprisingly good content out there, and used in tandem with the Kinect's voice control functionality, Microsoft provides a pretty seamless way to accessing it.

Put simply, this is a big step up from the situation of just a month ago, and Microsoft has catapulted the Xbox 360 into the big leagues of living room set top box entertainment. Recommended, and highly so for those already paying for Xbox LIVE Gold.