Unless they get into the phone market, I don't think they are ever going to catch up with Apple. Stuff like "web browsers" seems kinda useless if you are always going to have to tether yourself to a Wifi connection.
With all the rumors of a Zune Phone, I am surprised the Microsoft is content to just sit back and let Apple and now even Google take over the market.
Xbox Live Integration 
It was completely distinguished mentally-challenged that they were apparently selling movies/music for their media player that wasn't compatible with their set top box. The fact that such an obvious mistake is being corrected years after the fact hardly seems like a reason to cheer.
But then again, I imagine there will be block parties once the iPhone finally gets cut and paste
