Sounds possible to me. As long as MS has a steady stream of quality software that expands the userbase, I don't see why it can't have a measured growth. 38-40 mil after Dec '09 sounds about right.
The price, though, is a bit of a sore point. I honestly can't see them dropping it before 2010. The PS3, on the other hand, will DEFINITELY have one sometime next year. That could affect momentum somewhat.
We are far from full market saturation for these consoles, though. The combined userbase for last gen was nearly 200 million consoles and were currently not even at 75 mil this gen. As prices come down, they will all continue to grow. And since this gen will probably formally last until 2012 (my opinion based on comments from execs and engine builders), that still gives a good 3+ years after this holiday season to continue to grow those userbases.
