The Xbox Next will be more than a games/multimedia device they will turn it into a home console; not a games console. It won't simply be a device connected to the TV they will want all content to either pass through the Xbox via HDMI passthrough or be delivered via the Xbox itself. Microsoft wants people to always be using the Xbox in some fashion or another because the moment you switch HDMI input to say your cable box or blu ray player they cannot offer you any services but if they pass through the HDMI they can overlay over other content delivered like for instance with Skype calls when you're watching TV or immediately switch to the Xbox OS their device will always be available to offer service to the end user.

The big growth opportunities I believe they will target won't be games but pretty much everything besides games. The big growth opportunities for them will be in relation to apps for the home environment, education with natural voice recognition, shopping for things like clothes which will be easy to fit when your body is scanned by Kinect 2.0 and delivering content and computing power to remote devices like for instance with smartglass 2.0. Games alone won't justify any great increases in performance unless they can find other uses for that performance in general use scenarios and the market for games is only so big but with the cost of launching a top end console likely exceeding $1 Billion by a considerable margin the idea of a cheap simple console is a long dead one.

They won't be happy with users simply paying them $60 a year for Xbox Live and purchasing a few games, they'll want much more in the way of subscriptions and they will probably want to deliver the content themselves directly. They will likely push for different levels of subscriptions with the overall cost to the end user being between $200 and $500 per year ($15-40 per month) by the time you add up the movie, music and other content they will deliver via the internet. They probably won't move away from subscriptions but they will likely use them to heavily subsidise the cost to the end user so that if for instance you buy their premium package for a couple of years they will give you the console for free or next to nothing down.

I predict the hardware will be an 8 core Jaguar with half reserved at least initially for the OS/Kinect (Jaguar isn't designed like server chips so the two quad cores will be separate) with 8GB of RAM (5GB games, 3GB OS + Apps + Kinect libraries) and a ~1.5-2 TFLOP GPU (6-10* performance of Xbox 360 GPU). I believe they will follow the same design language as the Microsoft surface, I.E. sleek industrial design and peripheral venting which seems like a good application for console cooling in a confined space which will mean that they will do away with an optical drive as that is too much of a packaging compromise and not forward compatible to internet delivery of all content. They won't have any backwards compatibility except with games purchased as downloads which may be streamed for disc releases because the X86 processor probably won't be able to emulate the 360 efficiently enough.

So a $600 multimedia focused system ... Sounds familiar

So a bit like wii u..?

But it's right.. in few years.. not that many peple will need a pc (or mac)

The consoles are becomming the ultimate tv solution and offer all the content from the internet.. just much smoother.. and they will start having apps to (programs)

Look at wii u.. both the media (netflix and so) and the browser top what any windows pc can do.. and then look at the price.. wii u is truely a pc killer.. (and pc killer. means microsoft core business, is in danger)

Probably a $399 system. It is difficult to support both a HDD and an optical drive in a device under $299 whilst making money on the console itself. A few dollars in costs of manufacturing translates to a large increase in costs at retail. By the time you add up the extra cooling costs due to packaging, the extra shipping and handling expense and the extra retail margins to carry a larger box in stock with the margins cascading through the supply chain a small increase in size and cost at the console end translate into a big increase in costs down the line.

Yep a bit like the Wii U. We are looking at a scenario where a large proportion of the population realises that they don't need the expense or hassle of owning a 'real PC' when an appliance works better for their uses. What Microsoft wants more than anything is to become the premiere content distribution platform in the world to diversify from their PC/Office/Business software. They are facing increased competition from all sides between Google, Apple, Nintendo, Sony and any small upstart in his garage with the next big idea.

When half of the time the Xbox 360 is used is based on playing movies off the internet and a good proportion of the rest of the time is playing games downloaded off the internet then the sacrafice in putting an optical drive into a console becomes a noose which drags the whole machine down, it becomes a killer compromise to the price and functionality of the device.

Yup this is what I see too.

It will run Windows RT too and apps. 

$299.99 -- Deluxe w/3 Year Subscription to XBLA
$399.99 -- Basic Package (no HDD, small amount of flash RAM)
$499.99 -- Deluxe w/HDD (this is what most people will buy at launch)

It will have a lot of the same Nintendo TVii stuff like the Wii U does, but the 720/PS4 will be more flexible and have more features (ie: play Blu-Ray movies, play all your video content, stream content to and from your smartphone and/or tablet, etc. etc. etc.). 

MS will take a $50-$60 loss/unit the first 6 months or so until mass production ramps up, not a big deal.

Destiny (Bungie) and something from Epic will be the lead launch titles. It will be backed by the biggest marketing campaign in video game history.  

I have checkbook in hand & Credit card at the ready also .

do not want.

Don't like the sound of that, I would like just a pure games console. None of all this netflix, youtube crap, just something for games.

I actually think Nintendo TVii is quite brilliant of an idea, and that's even before the service is available, lol. I really think the ability to use the Wii U as your TV hub, even just for now, I usually use the Wii U tablet to turn on my TV and change channels, I'll quickly go into the browser to check sports scores and browse forums during commercials. During half time of a game, I'll flip on some Mario to play.

The thing is Nintendo is probably going to bungle this feature by not marketing it properly. MS/Sony will copy it and end up popularizing it. I think even Apple is watching.