The only issue with that is Natal is rumored to be very expensive.

This definitely seems like where they are heading. Hell, look at the media coverage they are scrounging up for what is, for all intents and purposes, a prototype. They are going to launch this thing with a money filled catapult. We will just have to wait and see if this succeeds or not.

A number of American households have more than one console, especially those with more than one guy between the ages of say 5 and 18

@TheSource: But do they have more than one PS2? I only used PS2 numbers to avoid that kind of error, since there should be a lot of houses with a PS2+Xbox or GC.

In MS's press conference, they intimated that this was the case: launching Natal would be like a re-launch of the 360 as a new console, without having to buy all new hardware.  Whether they are succesful or not, obviously remains to be seen.

As far as cheap/easy to use, I'd disagree/agree with you; MS is NOT positioning NATAL as a cheap, technology.  Nothing they have said or insinuated would lead me to believe that they expect to sell it as a cheap alternative to other technology.  In fact, I'd argue that they are trying to position it as the cutting edge technology (which is never cheap).   I do agree however that easy to use is one of their selling points.

On topic, I'd expect NATAL to be MS's reason for their "10 year plan", to milk this generation for all it's worth.  The original XBOX was MS's loss leader to get them a foot in the market, I'd venture to guess that they are now looking at extending the life of the 360 as long as possible in order to recoup as much of their investment in this arena as possible.

I just found a report saying 42% of US households have a console:

http://news.teamxbox.com/xbox/19864/60-of-US-households-Play-Computer-or-Video-Games/

So I guess that was right. However it does say 60% of households play computer or video games.

I wonder if this means it'll have a ton of launch games? I bet Halo: Reach will be Natal compatible. If it gets bundled with natal, its hard to see Natal not becoming big.

The number of "motion-tech-titles" is not important. It is about a new experience with no controller needed. Look, the Wii had almost 0 huge games after Wii Fit / Mario Kart / Smash Brothers last year. But those games were enough to get the consoles sold... in a big way. People still buy the Wii, because of those few titles. I know, there are other interesting titles, but not a single one being as big as the 3 I mentioned.

So get Natal out with the Paint Party / Riccochet / Burnout stuff. Release Milo some time later, release the titles Rare is working on and we are fine. I am not saying those titles are as big as Wii Fit or Mario Kart, but those titles are enough to get people interested in this new technology. It won't do Wii numbers, but it will be a success. I am pretty sure. This is where MS is really good at.

MS will advertise this like THE next step.

yes, make sure you don't forget