Yeah I never thought it was developed in house, but it still looks they will get it to market in a big way sooner than anyone else.
I know Microsoft are a popular punch bag, and I'm not wholly enamoured with them, but I have to say, they often get it right on the second try. They tend to rush things to market, get a foothold with tech that might not be quiet ready, and then go back and get it right.
Windows 7 is shaping up to be an example of this, the .net develpoment environment and tools are another. The 360 is a very good console (my favourite and I have a PS3 and Wii, although really the Wii is in a different class).