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Microsoft is good at copying other companies.  They are going to look at Nintendo as the model and try to launch a casual friendly machine with a price point of $250-300.  The only way they can do this is to delay the launch of their next machine.  Being first on the market didn't help the Dreamcast.  In the time between the nextbox they will add motion controls to reinvigorate the 360 and sell a killer app (ie Wii sports)  that is bundled with the new controls.  

MS should be paying me a consulting fee.  :)