Source = http://xbox360.ign.com/articles/778/778961p1.html

Spring Update Unveiled
Messenger comes to Xbox 360 alongside a slew of features and new keyboard.
by Erik Brudvig and Jonathan Miller

April 8, 2007 - At some point during the week of May 7, Xbox 360 owners will turn on their console and find that a new update is available for the dashboard. The timing
will coincide with the launch of Games for Windows Live by no small coincidence. In total, some 1,600 changes, fixes, and updates will be applied. Most will be superficial. Few will even be noticeable. But the groundwork is being laid. In sitting down with Jerry Johnson, Xbox Live Group Program Manager, and John Rodman, Senior Product Manager for the Global Platform and Accessories Group, we got a glimpse of the immediate future and beyond. It begins with Windows Live Messenger integration.

Xbox Live users currently send more than 2 million text and voice messages a day. With just 6 million members, that makes for one talkative community. Expect that number to go up in May. With Windows Live Messenger built into the Xbox 360 dashboard, console owners will be connected to a much larger network of PC and Windows Mobile powered cell phone users that currently boasts 260 million active users.

Our demo of this Messenger service showed just how simple and powerful it is. When you receive a text message on your Xbox 360, a small box will appear that overlays the bottom portion of the screen. The box serves as a chat room with incoming and outgoing messages appearing automatically, removing the process of bringing up a new screen to see the context of the message. Multiple people can be in each room and the texting can be done on top of games, movies, or on the dashboard. The placement and opaqueness of the box won't be adjustable, though that will likely come in the fall according to Microsoft.

Major Nelson is always a cheery fellow.

Sending text messages through Xbox Live is currently an arduous process unless you enjoy plugging a USB keyboard into your console. Without the elegance of some other text input devices, such as the Wii-mote, adding Messenger support seems odd when the easiest way to communicate right now is through voice messages. That is why Microsoft will release a keypad that plugs into the bottom of your controller using the headset plug. We had a chance to try out this text input device and, although it looks unwieldy, it fits comfortably in your hands and doesn't impede your ability to easily reach the controller buttons. The keypad will be released this summer and the image shown here isn't the final product. A few changes are still being made, with one being the colors and fonts on the keypad to make it easier to see what you're hitting. No pricing or exact release date are known, but they won't be available when the spring update releases. The Microsoft representatives were also unable to tell us whether the keypad would also be available in black to go match the upcoming Elite console. Whether the keypad will work when the controller is used on a PC is unknown at this time.

Jon Says:
Windows Live Messenger, big deal. While the slick friend list integration and nifty keyboard are impressive, the addition of Messenger to the Live service is really more of a harbinger of things to come. Don't be surprised to see your MSN and Hotmail email accounts added to the mix in future updates to Xbox Live and, with a little wheeling and dealing on Microsoft's part, you shouldn't be surprised to see a service like MySpace taking part. Of course, the keypad to me signals the coming of an integrated Web browser.

The keypad snaps on to the bottom of the controller and will have a pass-through for your headset.

The Messenger integration doesn't end with chat capabilities. Right now, finding a friend on Xbox Live is like searching for a needle in a haystack if you don't know their specific Gamertag. Once the spring update goes out, that process will get a lot easier if you have a Windows Live Messenger buddy list. That's because your Xbox 360 will be able to scan that list, tell you which friends have Xbox Live and then automatically send them Xbox Live friend requests. When you pull up your list of friends on the dashboard, you'll be able to tap a button and expand the list to Messenger users. A small icon will tell you whether they have associated their tag with Xbox Live or not, just as it will for Windows Live Messenger users on the PC. The icon will also indicate whether that player is in a joinable multiplayer session.

The Windows Live Messenger integration isn't the only new feature Xbox 360 owners will receive this May. Remember, there are roughly 1,600 changes being made. Unsurprisingly, a number of these updates revolve around Achievements, Xbox Live Arcade, and the Marketplace. A new Achievement Unlocked notification box will show which Achievement you've accomplished as well as how many points it is worth. Highlighting the tray icon on the dashboard will display which game is in the console along with your Gamerscore and Achievements for that game. New options for sharing your Live Arcade successes will also appear with the ability to quickly send one of three canned messages regarding your Achievements and the game you're playing to anybody on your friend list.

Jon Says:
What continues to amaze me about the updates are not the big additions like Messenger and Video Marketplace, but the long list of small ones. Then again, Microsoft has 1,600 tickets open on Xbox Live, and it's consumer feedback like this that continues to evolve the service. In terms of achievements, you no longer have to pause the game to discover the meaning to the cryptic "Achievement Unlocked" notification. It's so simple, you wonder why it was never done before.

Downloading large files will become a friendlier process, an area in sore need of improvement in light of the recent announcement of a larger hard drive. A new Auto Download feature will enable users to download every free and trial version of Xbox Live Arcade games automatically. Perhaps the best addition to this area is the ability to have your Xbox 360 turn off when it is done downloading files. You'll be able to queue up downloads and walk away worry free. The Xbox 360 will go into a low power mode and then shut itself off entirely when all of the downloads are complete. If you want to stick around as movies are downloading, a new set of controls will allow you to pause, rewind, and fast-forward videos while they are still being downloaded.

Text chatting will allow several people to talk in one room. Voice chat will still be limited to two people.

Streaming media from your PC through Windows Media Connect will also get a couple of additions this spring. Included in the update are codecs for H.264 and MPEG-4 formats, expanding the list of supported formats which was previously limited to only WMVs, a big boost for those of us that like to stream movies from our PCs to watch on home theaters. Once that movie gets started, or if you're watching one you downloaded, you'll be able to switch the aspect ratio to Zoom, Letterbox, Stretch, or Native on the fly.

Jon Says:
The ball is rolling for Video Marketplace. There's a long way to go before it catches up with iTunes, but Microsoft continues to make it easier to download and access content. First, the download speed is getting faster -- almost three times as fast, Microsoft told us. Yeah, it's slow, but now you can turn off your 360 while your flicks continue to download. If the movie is still not finished in the morning, you can still start it up while the download continues. The 360 is fast becoming the only box you need in the living room, and we haven't even talked about IPTV, slated to launch this Fall.

Perhaps the most noticeable change will be the inclusion of a whole new blade on the dashboard. Worry not, this new Marketplace blade won't affect your themes because it will be entirely distinct from the rest of the dashboard with a dynamic look. The goal here is to consolidate the Marketplace experience into one place rather than spreading it across several different blades. More than cosmetic changes are being made though. The new look Marketplace will also give publishers and networks the option to create their own landing pages for their products. Theme and gamerpic showcase pages are the obvious start, but publishers will also be able to embed videos into the pages and create a more immersive and rich experience. This may not mean a whole lot to you or me at first, but these pages will be dynamic and controlled by the content creators. That means if game publishers want to incorporate this page into their game, they can. Contest results, leaderboard showcases, or more innovative uses of the page are all conceivable.

No more going to the guide button to see which Achivement you unlocked.

Jon Says:
Duh. This is another no-brainer on Microsoft's part. It's no secret that we were all getting a little lost navigating through the blades to Xbox Live's biggest and best feature: the Marketplace. Now everything is up close and personal with the devoted Marketplace Blade. For us, it makes for a much simpler way to access content. For Microsoft, it's a much more visible place to sell it. Internally up in Redmond, the blade was changed to green for St. Patrick's Day. Don't be surprised to see themed blades for big releases like Halo 3, Gears of War 2 and Cabela's Xtreme Caribou Tracking.

This talk of dynamic, product specific pages got the room talking about the future and options for users to create their own pages for everyone to see. Jerry Johnson told us that day isn't far off though Microsoft is focusing on the Marketplace and communication options right now. "The next phase of this...is being able to express more about yourself, build a richer profile and view other people's profiles." Imagine being able to create your own personal Xbox Live space, viewable by your friends or others on the web. If you just beat a game, wouldn't it be nice to be able to let the world know in a way that is more personal than an Achievement list? It's coming. "Not to knock what other people are doing in the industry, I think it's more about the information you share and less about some immersive 3D experience."

That day hasn't come yet. In fact, the amount of customization you can do on your Xbox 360 is extremely limited right now. The future isn't so far off though. It begins with Windows Live Messenger.