"I do feel like we never got a chance to have a rational conversation about what we were trying to do," Penello told Engadget.
When Microsoft revealed the Xbox One, it didn't have consistent answers to basic questions: Was it always on? Would it allow used games? Eventually, Microsoft announced Xbox One would require an internet connection once every day, and that didn't go over so well. Microsoft reversed its DRM features a few weeks later.
"Sometimes the customer just says, 'No. I look at it this way, I'm done, I've made up my mind,'" Penello said. "And we go, well, we've gotta fix it. It's not worth it. And that's where I think we were on the digital stuff. We'll get back to some of the cool stuff, and we have a lot of the cool stuff still in there."
Penello said Microsoft hasn't given up on a fully digital future. "We just think that's the way the future's gonna go," he said. "We may have been right. What we were wrong about was that it's just too soon. People just weren't ready to make that leap right away."