I am very sure it won't fail. MS has secured the best of the best developers supporting Project Natal and Lionhead and Rare are working on Natal as well can't be a bad thing.
And even IF natal fails, MS won't have much to worry about. They just might get new hardware out in late 2011 (one year after natal). The Xbox360 would be 6 years old by then, which is pretty much for a product in such a industry. The PS2 was 6 years old when the PS3 launched.
I can't think of any screnario that wouldn't make the 360 a success for MS.
Imagine not having GamePass on your console...







