I think there will be a two hundred dollar 360 by the end of this year. Microsoft has to make a move towards the low end market eventually. They have done well to hold off on that, but they should be looking towards getting into that market as soon as possible. Once there it will be a significant and profound edge in this console war. Probably not the premium, but the arcade is likely.
I don't think Microsoft is in any hurry to leap ahead again as they did with the 360. They will learn from their mistakes, and the mistakes of Sony. They will want to minimize the launch price under three hundred dollars. They will want at least a dozen solid AAA titles for the launch year. They will want better reliability, and they will want to have the assets in place to ensure that they can. That means they need to spend a significant amount of money to ensure it happens. So they will want to have as much time to profit, generate brand loyalty, and streamline their new machine rather the fix on the run. They certainly have the time so will use it.
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