Microsoft does ship a huge number of XBox, I think around 60+ million last year, but it's not really a cutting edge device since the console market is relatively sluggish when it comes to change. The Kinect is much more interesting from a technical standpoint.

I think based on the dreck that the OEMs have been delivering for the last 8-10 years, it's not surprising that Microsoft felt it had to jump into the hardware business directly.