Microsoft have put a lot of effort into making a really good karaoke game to rival Sony's Singstar and if you judge them purely on the basis of how the games interpret, track and score a player's singing, it's clear that Lips is really a step on from Singstar.
Sony have stood still with Singstar and the technology behind it hasn't changed much at all over the years and that's caused it to carry it's single biggest flaw from version to version to version: really good singers are penalised by Singstar, which only scores notes that are held flat. Anyone with vibrato is at a distinct disadvantage.
True to form, Microsoft have picked up on Singstar's flaws and made sure that they are absent from their clone. Singstar will not only accurately score vibrato, but gives bonuses for it and other vocal trills and improvisation that are in key. In technological terms, score a big fat one for Lips.
The technology is only half the story of course, as a karaoke game lives and dies by the strength of its catalogue. The 40 songs on the disc are a pretty good mix - there's something for everyone, but at the same time most people will struggle to find more than four or five songs that they want to sing. MS are clearly pinning a lot on Xbox Live Marketplace, but so far, a week or so after launch, there's only about eight new songs available, although A Ha's Take on Me is available free to anyone who thinks they can hit those high notes. At 200 Microsoft Space Bucks (or £1.70) they're pretty good value and comparable to the Singstar download prices, although the clunkiness of buying MS points and then buying the songs will be as irritating as ever.
Right now though, Lips is a fine product in dire need of more downloadable content. If Microsoft can get 30 songs up on XBL before Christmas, then I think they'll have a hit on their hands. If they don't, then Lips will be in Singstar's shadow for a long time.