Perfectly valid points. They could of course sell Natal with every Xbox 360 because the natural cost reductions over the past year or two plus the change in form factor would give them both the space they need in the box and the cost reductions required.

The one thing MS doesn't over charge for is controllers, so the price may not be that high.

I'm thinking the continued availability of a bare bones SKU may be dependent upon initial 3rd party support.

Some sources allege something as high as 60-70% of all developers (specifics would make this claim more believable) are currently developing projects for use with Natal. Presumably projects that require the add-on rather than offer optional enhancements.

If the majority of all developers were actively supporting Natal, then it is a much safer bet for MS to include Natal with every SKU as a part of the "base" console. If not... that's a fair amount of cameras that could potentially be sitting in console boxes unused. Kind of like the component cables no one with an HDMI HDTV uses, or the headset if you don't actively chat while gaming, only more expensive.

However, since Natal is supposed to function as an interface for the console GUI, realistically, anyone with an Xbox could use one even if they had no interest in the current games being developed for use with the peripheral.

The important thing to consider, bundle or no (specifically for the entry level SKU) is the price. If they have to increase the price of the base SKU, then I think they'll still have to offer a bare Arcade SKU or risk losing the entry level game consumer who won't pay more than $200 for a game console. 

But since the Arcade SKU does not make up the majority of Xbox sales, I don't think this would have much, if any effect on a developer's decision to immediately support the peripheral with a Natal specific title (supposedly, most are already doing this anyway).

And if MS can minimize losses through manufacturing price reductions on the console itself and still include Natal kits with current SKUs at the same price, all the better. Everyone wins. 100% adoption for new Xbox owners, no extra cost for the consumer, developers have the assurance that all new consumers at minimum will be able to buy and play their Natal specific games.

If MS really wanted to be kooky, they could potentially charge enough for separate Natal kits (say, $149.99) that existing consumers would simply find more value in buying another bundled console intead (assuming that $199 Natal bundle many are banking on happens).

Personally, I think the bare Natal kit will still cost well under $100, unless the above is MS' strategy.

If Natal was over $100, and a Natal/Arcade bundle was $199, I would imagine quite a few existing owners would simply buy another console.

i think 80

Unlike selnor I don't see natal getting into the hands of many existing 360 owners via a repurchase of the harware they already have. If MS want to sell to a substantial segment of the existing 360 install base then they need to make it a reasonably priced peripheral. In US dollar terms I think that's around $100. I think that's a good price as long as the sales pitch is right, which is: for $100 4 people can play motion controlled games. If you want 4 paople to play at the same time on Wii Motion or PS3 Move then you are looking at paying $??? which is a lot more than Natal.

However if MS don't care too much for the current install base (figuring a good many of the current base really don't have a lot of interest in controllerless / motion control gaming) then their focus will be on the Natal 360 bundle and they will stiff existing 360 owners with the $149 price tag and probably make a 30% profit on it. If they can do an [redesigned] Arcade Natal bundle for $199 then you might just find current 360 owners paying the extra $50 to get themselves an Xtrabox. $199 will probably be break even or slight loss, but the Elite will still sell for a tidy profit, as will the Elite Natal bundle.

I think $100 Natal, $199 redesigned Arcade Natal, $299 Elite Natal.

What I don't have a feel for is whether MS will continue to sell Arcade and Elite sans Natal at $50-$75 less than the Natal bundles.

$69.99. Only 10 bucks more than your average game and cheaper than a "complete" Wiimote.

I don't know how many Natal's you need for more than one player though; just one I'm assuming.........

Natal can track 4 players at once i believe.

I figured, but can't people play at most only two at a time?

It depends what game you play I 'spose.

It'll be interesting to see how the first 4 player game works. Presumably there will be something like doubles tennis or table tennis, maybe 4 player DDR or something along those lines.

Naturally there will be the obligatory 4 player party collections of mini games as well.

If the camera itself uses a motor to track a moving player (not limb movements, but lateral movement) there may be some limitations as to how it can track multiple players at once. Of course, there will always be the physical limitations of room size, and any in-game requirements for faster or more exaggerated actions. You can't exactly have four players running around a 25' square playing field.