Who's More "Fun", Apple or Microsoft?

According to ARSTechnica (Microsoft's Origami: touchscreen computing, entertainment on the go?) Microsoft will be going head to head with Apple for the "fun" segment with both companies announcing new "fun" products today.

This really confirms one thing:

Microsoft is trying desperately to diversify away from software.

Currently the XBox 360 is operating in a competion free market (PS3 and Revolution are a way off yet). The same cannot be said for the MP3 and PVP market which is extremely congested with tons of companies fighting for the 10% of the market which isn't iPod dominated.

Apple have created an iPod halo which they hope to use to tempt users to switch to the Mac platform. Could the XBox and XBox 360 provide a halo for Microsoft and convince users to buy more Microsoft products in the consumer segment? (Microsoft already have the Halo halo... now I'm confused!)