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Its not going to happen. Its to early they already are starting to build a userbase. They just wouldn't give up on the 360 altogether. I give it till 2010 and Microsoft will release its next console. But saying E3 2008 Microsoft will announce a new console, is to hard to believe. The original console died because Microsoft was in contract disputes with Nvidia. They wanted to reduce the cost on the graphics chip, but Nvidia fired back and stop production on the graphic chips, which made Microsoft release the 360.

This isn't going to happen this time. Microsoft knows now and they are going to push this 360 for 5 or more years.