Though often criticized, one of the things that Microsoft has done tremendously well on is marketing their X-Box line. They haven't focused on big media ads but rather on developing a community of passionate fans.
Video games are a huge growth market, in which revenues have exceeded both the music and movie industries. The internet has been a great thing for the gaming industry while the music and movie industries have not been able to take much advantage of the internet. Most importantly the internet enables X-Box Live, where users can connect to players all over the world, a community of 10 million users. They can also download samples of games for free or purchase mini games. Their platform is open to amature developers and it was just announced that users will be able to play user generated games on the online market place.
Microsoft also has a public relations guy Larry Hryb who hosts a weekly one hour podcast that discusses exciting news and developments in the X-Box world which many customers listen to which great interest. The X-box team's ability to create a huge passionate community has resulted in a competitive advantage over their competition. Now if they can only get their product testing right.