Your toaster might be able to play Xbox games in the future.

Bill Gates hinted, that Microsoft considers to license the Xbox software platform to consumer electronics companies. This would extend the reach of Xbox potentially. No real details are available. It is not clear if Microsoft talks about Xbox or already Xbox 360.
More details in this AP story.

Not sure if licensing a game platform is essential. There are though more and more gadgets that have built-in games. More and more Portable Video players and MP3 players have built-in games. TVs with built-in games might be next.
Still the main battle is fought with the consoles between Microsoft and Sony.