Well, I'm not denying that innovation is being stiffled in the PC department, but the console market is quite a different situation. Microsoft isn't the biggest, and there's no guarantee they will be.
And it is my opinion that -any- player that gets too big a percentage of the marketshare will stop innovating. Nintendo in the mid-90s were refusing to go with the CD format because of the loading time, and swooosh, in comes Sony with a console that has capability of real 3d grapics and real music and proper quality voices (technically speaking, not saying anything on the actors themselves).
Then Sony took over, and after that, pretty much stopped innovating much. Nintendo was first out with an analogue stick, but due to it being for the N64, only the Nintendo fanboys and general "need evey console" hardcore player (and a few others, I suppose) were to benefit from this. Sony then figured out that it would be a good idea to include not just one, but two analog sticks. A bit innovation there.
And since the PS2 launched? Well, the controller certainly hadn't changed in any significant matter (and the so-called pressure sensitive face buttons went by completely unnoticed). And what have they done since then? Let's take a look at some of the newer ideas out there for the last five years:
Hard disc for a console: Microsoft.
Proper online playing: Microsoft
First-company wireless controller: Nintendo
An actual -new- controller with new properties that is -potentially- capable of giving a whole new experience to gamers: Nintendo.
Looks to me that at least for the time being, Microsoft is actually helping innovation along.
And what are Sony's responses?
The hard disc for PS2: Hooo boy, I tell you, I think only Sony could fail with this one. It was one of the major factors for XBox staying in the market, and frankly, it just made sense to include one. But Sony managed to make a mess out of it. Final Fantasy XI and some game I can't remember the title of were the only two games taking properly advantage of this one, and it's now in gaming limbo. It was a result of Sony's standard attitude of "we'll just make some hardware and hopefully enough game publishers will make use of it". Well, this passive-reactive formula certainly failed, which is why the slimmer PS2 box isn't even capable of having it installed.
Proper online playing, I've already said my piece on.
Wireless controller: Yep, going to get that now, seeing that it was one of the few things the Gamecube owners could be proud of, and which Microsoft has helped being a standard for shipping with the console. Reactive from Sony, not an inch pro-active.
New controller features: Some sort of "Wii controller light" thingie, being born most likely out of a giant legal battle. Though the fact that the Revolution/Wii controller, when first announced, make big waves amongst all the hardcore gamer media outlets (as well as some mainstream ones) probably didn't hurt the decisions made in R&C. In fairness, I will admit that due to lack of knowledge, they might have started working on this feature -before- the Wii controller was announced.
So, as far as I can see, it doesn't matter much which company is on top of the gaming hill, it's those that are beneath it that will be hungry, edgy, and ready to pull things forward. And if Microsoft is to become the biggest here, it will more likely be because they have an overall better product to sell, because other well-known brands are still around.
