well I dunno about MS plans but gamer wise I think this year was the best MS could have hopped for to revive the console.
1_ GTA proved it had gained a bunch of the last gen gamers
2_ 360 became ok since the RRoD was not in the subject of talk anymore
3_ FFXIII announcement folowed by a bunch (yes badly reviewed but better than the void elsewhere) of RPGs surely helped it's status as the potential lead HD console for gamers.
4_ Price drop in the fall hit the sweetspot...
5_ Sony's High profile games doing only ok compared to the doing Woohoo of gears/fable means the tide will turn for developpers. "X360 does what the PS3 don't" -> Sell (of course the PS3 still sells well but not Whoohoo well).
I think the life of the 360 now depends on the Wii. MS will probably keep a PC oriented console, meaning that the drawing board is flexible and they will anounce it to come out arround when Ninty anounces theirs.... trying of course to gain a year on them if possible.
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