If MS released Natal almost a year early, exactly what would we be playing on it? Tech demos? Because it takes a bit more than UNDER a year to crank out anything even remotely resembling the killer app that Natal needs to convince consumers that it's really for real.
If they did a half-assed approach like SCE and the PSEye, it would become nothing more than a footnote until something actually worth buying it for was released.
Since I'm one of those who believe MS will use the Natal launch as an opportunity to reinvent the console (NXE was beyond retarded as a marketing strategy to accomplish this same task) and introduce it to a new pool of consumers, a repackaging of the hardware itself would be a good idea.
Many owners of the original design would also buy one as they've already demonstrated the willingness to buy more than one.
As for the HDD, the clip on design could very easily be dropped and replaced with an internal slot bay (HDD cartridge) similar to what HP uses on their Pavillion PCs. The case doesn't have to be the same width as a 2.5" HDD in a plastic shell.
As for the heat/reliability issues, the rumored single die CPU/GPU chip would put a reduction on everything from amount of silicon, amount of voltage, amount of heat dissipation, etc.
From an engineering standpoint, it's completely doable.
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