Xbox 360's Lips karaoke game is notable for two reasons. One is the Vegas loungy motion-sensitive wireless microphones that trigger bonus scoring opportunities for you as part of the game. The second is the feature that lets you use any DRM-free song from your iTunes/Zune/Amazon library as a base for singing. So what the hell went wrong?
A number of things. Head to Kotaku if you want to see how the software side works (or doesn't work), since we're only focusing on the hardware and the media aspects. First, the hardware.
Hardware:
The two wireless microphones are fairly weighty, nicely balanced and can sense gestures you perform while singing. At least, on paper it can. In our tests we found that vague shakes of the mic can trigger the bonus mode, giving players an alternative to actually have to do fake air guitaring, fake rope lassoing and fake whip cracking.
As for actually singing, the three AA-powered microphones are at least as good as Rock Band's and Singstar's versions at picking up audio, if not slightly better. These are also wireless, which is a welcome solution to the problem of tripping over cords in the living room. They're also being adapted for Rock Band use eventually.
But wireless mics with no displays actually make it a pain in the ass to sync up with your Xbox 360. The wordless, diagram-only instructions were little help, telling us to hold down the power button for a second, then pause to turn on the 360's sync button, then hold down the power again for three seconds. We may have been beaten on the head a lot when we were kids, but it shouldn't take us 10-20 tries to get this to sync correctly.
Media Import:
Here's where Lips really disappoints. The implicit promise of having Lips take in any song from your music library as a track for you to sing and give you a comparable—if not quite as good—experience as a pre-packaged track is not just broken, it's shattered. Your own songs will be missing both lyrics and a tone bar, meaning you need to either recite lyrics off a nearby laptop or cull them from your memory. And, you don't know if you're hitting the right note other than your score going higher as you get in the ballpark.
There's also no option to import lyrics into your songs, even if you have lyrics embedded inside your MP3. Or timing data, if somehow you knew what Lips supported and rigged that up. There's nothing you can do to salvage the experience. It's the same as playing back an MP3 in iTunes and singing along, except with a halfway decent note detector grading you on how close you are to any noise being reproduced; even the guitar and backing string tracks.
The act of importing music isn't much better. For some reason—and we're guessing it's a memory constraint—you're limited to only viewing 5356 songs at once from input source. This includes your iPod, your Zune, your shared music over the network, your local hard drive or an optical disc. 5356 songs is quite a lot to actually import into the game, but most people's music collections, let alone their iPods, have more than 5356 songs on it. That means you can only SEE that many songs at once, leaving the rest of your songs hidden and unimportable. Huge oversight. As for the songs it can actually see, Lips takes about 30 seconds per 100 songs, so you're going to be sitting there for a long ass time waiting for your music to show up in the list so you can select it.
Verdict:

All these gripes aren't to say that the game is bad. The actual game itself with the set of 40 packaged songs is polished and fun. But the media import "use your own music" feature, which is one-third assed (not even half-assed) at best, should probably have been left off entirely than shipped in such a tattered state. It's only that this game had so much promise that were so disappointed. We predict that it will be a long time before we actually see a game that delivers on the promise of taking your own purchased content and presents it in a new and entertaining way. [Lips]