Microsoft plans to combat Apple’s iPhone and Apple TV in a big way; by bridging Xbox and Windows Phone 7 in new ways.

The company is already poised to introduce groundbreaking new services for Xbox 360, designed to stave off the threat of Apple TV, and Apple’s own television devices reportedly in-development. The Xbox 360’s major software updates, set for the end of this year, will unveil new Video On Demand (VOD) as well as live television channel services. Xbox 360 already offers Video On Demand via Netflix and Hulu, but Microsoft will be offering its own television services, more designed to offset the need for traditional Multiple System Operators (MSOs) such as cable and satellite.

Windows Phone 7.5 will also benefit from these changes. The Xbox Connector will enable Windows Phone 7 to browse and access all content available on Xbox 360, including all new video access services. This will give something to Windows Phone 7 that both Android and iOS lack; unique video services that require owning a Windows Phone 7 device to utilize while mobile.

The Xbox Connector application will also allow users to control their Xbox remotely, and use their phone as a remote control for the Xbox 360 for the first time. Previously, Xbox integration on Windows Phone 7 was relegated to trivial profile status updates, as well as Xbox Live experience integration in Windows Phone 7 games. This update will allow Xbox 360 and Windows Phone 7 to communicate jointly, via networking (Wi-Fi on the Windows Phone, and Ethernet or Wi-Fi on the Xbox 360).

Apple TV allows for iOS devices to control the unit, but the experience is limited. Microsoft is touting the Xbox 360-Windows Phone 7 integration as more holistic. In addition to remote control functionality, users will be able to run “Bing searches” for content on the Xbox 360, and control the device remotely using search results.

All of these reasons give new openings for Windows Phone 7 to enter target audiences. For hardcore gamers, many many choose to purchase a Windows Phone 7 device and simply use it on Wi-Fi or prepaid service, to benefit from the ease-of-use improvements. Families may also prefer to give Windows Phone 7 a chance because of the parental control experience that is bridged between Windows Phone and Xbox 360.

In reality though, the mainstream audiences will only be swayed by this experience if it is consistent, immersive, and marketed properly. Microsoft will face extreme challenges in advertising this experience as one that deserves replacing the entrenched Android and iOS platforms. The good news for Microsoft, is that they now have compelling reasons to pick up a Windows Phone, that simply did not exist before.