Analyst believes an Xbox 360 Slim is inevitable

Oh, those wacky analysts! With Sony announcing the PS3 Slim this past week at Gamescom, plucky analyst David Cole of DFC intelligence believes it's only a matter of time before Microsoft follows suit and announces its own slimmer version of the Xbox 360.

"I think it is a question of when not if," he suggests. "However, the when part is a big uncertainty ... rumors have been going on for a long time.  I think people were asking me the same question last year at this time. As cost efficiencies allow smaller and more reliable is always a good thing. However, you also have something like Project Natal which could also tie in with hardware redesigns.  

"There are a lot of questions Microsoft must weigh internally and there are always going to arguments on both sides of the fence around timing. So I don't know, but in our DFC forecasts we anticipated a major redesign in 2010....so I guess that was our bet."

Two other analysts, Tom Greenwald and Arvind Bhatia, disagree with Cole, beliving Microsoft doesn't need to do this, and probably won't. Ben Schachter or Broadpoint AmTech believes that Microsoft will definitely redesign the 360 to tie in with Project Natal next year. 

What do you think? Is a smaller, sexier Xbox 360 coming our way? Does Microsoft need to do this? I can't personally imagine them announcing a 360 Slim since the original model is still doing quite well, but you never know. I won't rule it out, I'll just not believe it until I see it.