The entire Microsoft Xbox strategy remains flawed to the point of borderline insanity.
The notion of "taking over the living room" is completely outdated. Look around your living room some time. Count the number of people in it, then count the number of screens in it. I'll guarantee you that there are at a minimum at least as many screens as people, and sometimes more.
The notion of "taking over the living room" is insane in 2014. There is no living room to take over. Everyone - kids, adults, seniors - has their own universe of entertainment in their hands at every moment. A set-top box with the Xbox name on it plugged into a TV is a ludicrous idea that only out-of-touch executives think makes sense.
The entire Xbox strategy is a failure, and if they keep going down this path the entire business will cease to exist.
That's a good point, but I don't think the transition has happened completely yet. Sure, everyone I know nowadays have a smartphone and/or tablet, but also everyone I know when it comes to consume watchable media still do on their comfy couches and big ass TVs... For instance, isn't netflix used mostly by console users, despite being available on pretty much every device under the sun, with many times the installed base as all consoles combined?
And even when there are many devices in the same room getting content from these devices to the big screen is still a hassle and far from being dominated. There's no widespread solution for solving this issue, and most of the candidates are not even good enough for the task. The best non console solution I've seen to this problem is chromecast, which instead of sending content from one device to another sends an application so the miracast itself can connect to the internet and get the content (where applicable of course, as Google now added support for streaming to chromecast too), but even that doesn't hold a candle compared to the commodity that is using xbone with kinect to consume media, specially when you throw handling multiple streams and multitasking into the mix.
Sure, most of that will depend on Ms to provide compelling experiences, but even though they are moving slowly, they seem to be doing a great job. Snapping apps that improve socialization in games, dedicated apps for sports and other events already shows great promise on their one device to rule them all moniker. Going from a game to a soccer game after receiving notification that an match is about to start, receive realtime data from that and other matches, and at the same time being able to connect with your friends, or even go back and forth between the match and a game is a real example that already makes xbone feels like it's something more. I really really, really don't want them to abandon that vision.