Aaaw, isn't that the most heart-warming story of media whoredom you've ever read? Let's be real here, if this was about someone's kid doing the exact same thing we probably wouldn't even be reading about it. The fact that its a dog makes the story that much cooler, (and it is a totally cool story, don't misunderstand me) but my problem is how Microsoft very casually turned it into free PR for themselves under the guise of "just being cool about it".
Now that might just be my inner cynic talking, (who, me?) but in a lot of ways I can't blame Microsoft for jumping all over this. I mean hell, all they had to do was send out a controller to the guy which cost them nothing and is probably a $10 write off anyway, create an account for the pooch and notify the media. What better way to get the equivalent of a few million dollars' worth of advertising for free? Even better if they didn't contact the media and the story was just picked up, but this is a multi-billion dollar corporation, so I think that might be stretching it a bit.
Either way they handled the situation intelligently. If had been up to some bean counter or lawyer, I'm guessing the outcome would have been anticlimactic at best. Good thing the PR guys jumped on it first.
How long do you think it will take for the copycats to start popping up, looking for free stuff? "Dear Valve: My ferret stole my credit card and racked up a bunch of purchases on Steam, can I keep the games but get my money back?"