What really happened with XBox Music and Video apps
We can all say that Microsoft kind of dropped the ball here with XBox Music+Video. The problems with syncing, cloud connection, renting movies on your phone. It's a mess right now. So what happened? Personally, the XBox team was not readied by the Windows division on how much of the content and lead role XBox brand will play into W8 and WP8.
They were probably working on the next XBox(s). There's most likely be a portable one, a full gaming one, and my guess of a lite one with basic content and music+video features. That changed when the XBox team wanted an app that could be use on any mobile device to control the XBox (XBox Glass). I don't think we understand how hard it is to get something to work on every platform. Very few companies even attempt to do this and do it at the rate the XBox team needed to do.
They just announced the store a few months back while the XBox team was probably still working on Glass. They just released the iOS version of Glass about a week or two ago. Meanwhile they are also put up to the task of bringing XBox Music+Video to every mobile platform, ensuring a proper transition from Zune, get desktop apps out for Windows and Mac OS, a web based client, a music matching service, and finally a digital locker.
Oh they are also working on the next XBox...
I feel the Windows team added pressure to the XBox team leading to lots of missing features. This was suppose to be the killer app for the new Windows. Control your XBox, listen to your music and videos anywhere! Instead we get headaches.