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I believe as a external device that could break, it did not make sense for MS to require it for operation of the console. As a device they feel will separate their console from Sony, well that's a risk it appears they are willing to make.

What I find is that nature always favors the bold. If you are bold and take risk, you have the chance to crash and burn but you also have the opportunity to gain greater success. This was true for Nintendo with the Wii. It was very bold for them to go on their own and do their own thing. Once in the hands of users their system gain popularity and Nintendo reaped the rewards. You can put Apple on the same list. I remember all the negative things people were saying before the first Iphone released. Once the device got into peoples hands, Apple was able to reap the rewards of doing it their way.

So MS is betting that Kinect will give an experience better than what people are expecting. Its a huge risk because it adds more cost to their console but it also puts them into a position to execute or risk failure. I like it more when MS is in desperation mode then when they feel they have everything wrapped up. There are things I am looking for Kinect to do and I am hoping MS can nail the experience.