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It is possible that Microsoft would take this approach but I would advise against it ...

I like the touch-screen controller idea and Nintendo's approach of using what seems like outdated components to keep costs down seems ideal, but I think that it is an awful idea to have multiple console manufacturers produce systems with tablet controllers.

While I think it would be a mistake to focus heavily on Kinect being that it is already on the market and many of the games that use it (probably) make it less popular with their existing base, it would make far more sense to focus on Kinect simply to be different from your competition.