I saw a demonstration of the Kinect at CES and I was impressed with the technology. The Kinect is a big win for Microsoft. Not only is it a commercial success, but it's also the first Microsoft product in quite some time that has captured the imagination of consumers.<p>Now Microsoft needs to leverage the success of the Kinect to further expand beyond the PC. An obvious direction is to use the Kinect to gain additional market share with the Xbox, since the Kinect is currently designed as a UI for this device. But I think focusing exclusively on the Xbox is a mistake. The Xbox (and other consoles and set-top boxes) may soon get enveloped and displaced by other technologies, particularly connected TVs.<p>I suggest that Microsoft leverage the Kinect as an element in a coherent connected TV strategy. Connected TVs are just emerging, and there is still time to match the developments of Google, Apple, and others in this space. To enter the connected TV market, Microsoft needs to quickly develop a connected TV OS, forge relationships with app developers, and acquire or partner with content providers (e.g., Netflix, OnLive.com). This is all feasible given Microsoft's significant software expertise and its existing relationships (e.g., with Netflix, game developers, etc).<p>Microsoft has been struggling to gain leadership in markets outside the PC. For instance, it's behind in smartphones, tablets, and portable media players. The Kinect could give Microsoft the edge to dominate the emerging connected TV market. The technology strikes me as an excellent UI for the 10-foot viewing experience, especially for interactive media. It can then leverage success in this market to gain further ground in related connected device markets. I think there is a significant opportunity here. Thoughts?