Maybe Apple wants to make a portable console, not a home one, it would make more sense for some reasons:
1) this gen the first ranked portable, DS, already sold more than all the home ones put together
2) even the second, PSP, sold almost as the first home one, Wii
3) there are only two competing portables right now, as opposed to three competing home consoles
4) portable devices made Apple skyrocket, they do as always fine (but quite expensive) computers, but iPod success makes them almost pale, business-wise.
That said, whatever Apple does, MS won't like it, it's already trying to grab a slice of Apple's pie (sorry for the pun 
) in music downloads and players and it considers a divine right of its to own home computing.
If all the rumours are false, nevermind for Apple: it's all free advertising, as always happens every time Jobs plays his show.
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