TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

Gizmodo published their thoughts on Xbox 360′s Fall OS update, and it’s certainly worth looking at.

It appears that Microsoft is doing some great things in the new OS. It looks much more streamlined than the old blade design, which is welcome (even though the current interface isn’t that bad). But what is even better is its Netflix integration.

I am a college student and I don’t have cable, so I rely on Hulu, iTunes and an often-occupied community TV to watch TV shows and movies. I do own an Xbox 360 and do have an Xbox Live subscription, so Netflix hooking in to my Xbox 360 is very exciting for me. It gives me more options for watching movies and TV shows, and I don’t have to pay anything more than I currently do.

It’s obviously a direct threat to AppleTV, and I hope Apple has a response prepared. While iTunes+AppleTV is a great way to watch a select group of shows, its pay-per-show model just isn’t built to allow people to watch a random show or movie, which is what I want to do a good percentage of the time. When I am eating dinner or have an hour or two to burn, sometimes I’d like to try a show I’ve never watched before, and I can’t do that when I have to pay $1.99 per episode or $2.99 per movie.

Hopefully Apple is working on some solution to this, if it wants to compete in the market. Hulu integration would be an excellent start — if I could watch Hulu through an AppleTV, I’d buy one immediately. Until then, though, Xbox 360 has the upperhand.