You know that RROD fiasco is instructive, but I have a different takeaway.
Back then MS was the underdog in the console business. They had big ideas for multiplayer and Xbox Live, and while there was always talk of the 360 being a trojan horse for attacking the living room, their focus and creativity was directed to one thing above all else - the games.
They came up with probably the best damn controller out there, standardized a set of features across all games, including custom soundtracks, achievements, trials for arcade titles and integrated chat and party systems.
Back then they had to fight for their position, and they won it with advanced services, solid games, regular updates, and by swallowing their pride and charges from RROD.
But somewhere along the line they stopped and changed direction. Competitors now have comparable services, and have kept multiplayer free. How did Microsoft respond? They raised the price of Gold. They 'added value' to their membership by cutting features from Silver. They shut down their previous Xbox service, and yet we havent seen the service upgrades that was supposed to make way for. But we have seen them drop the family plan.
This isn't the same scrappy and creative Xbox team that existed at launch and for those first few years. Its seemingly been handed over entirely to the bean counters, marketing teams and casual/media entertainment group.
What they're seemingly forgetting, if the rumors are true, is that they still have to fight for every single customer if they want to succeed next gen. They have to continue to raise the bar - their competition has not been sleeping.
If this whole shitstorm acts as a wake up call, then maybe everybody can win here. I won't count them out until we have all the details, but they are fully responsible for their public face and perception and distrust right now.