I don't think MS will make another console to compete with Sony. MS is in this for money, and the money is being made by Nintendo. Plus, Sony is in a much better position to make the next generation cheaper. MS already said it's going with digital downloads only on there next console, so I don't see it having 50 gig games.
This generation, it's very clear that there is a distinction, otherwise we would not have so many flamewars over it. Next generation will be even more clear because I think they will go after different markets.
I think MS will be successful in that direction too. There only drawback in both attempts at making a console was the hardware. Remove that from the equation (meaning make something that's not so cutting edge), and I think MS can succeeded on what they do best.
The 360 experience is a great one if the box would just stop breaking.
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