Looks like the response that we've been waiting for all year is upon us now. They simply waited until they had favourable conditions to show the cards they have in their hands. This is make or break time for the Xbox360. This is not the time to make predictions on the Xbox360s fate, we really have to see what they are bringing to the table at E3 this year. This E3 and the next 6 months are critical for the Xbox360 as any momentum gained or lost from q3-q4 this year will determine the ultimate success of the platform perhaps until the end of this cycle and beyond. No prediction for the success or failure of the Xbox360 can be made without first seeing the cards that Microsoft has in their deck.

As Microsoft is in a position of asyncronous information, it is foolish to dismiss the moves that they have made and will make over this year as they see a much bigger piece of the picture than anyone here does. The interesting thing is what they do with this information that really matters.

• If they see blu ray as important, then they will release an Elite with blu ray inside, if they don't then they won't. Its their actions that will indicate the current importance of this movie platform to consumers somewhat. We certainly have heard a lot of rumors regarding this change.

• They seem to be implementing a different approach this year than last, especially when you consider the games that are becoming available towards the end of the year. However this would have been a strategy laid down years ago. You simply do not turn on a dime with regard to pushing good/great exclusives out from one genre to another. There is no desperation in the games they are releasing exclusively this year, they had this planned at least a 18 months if not two years or more back. It seems like a deliberate action, take a lead in the first person shooter genre then move on to the RPG genre with the aim of dominating that as well. Microsoft seems to like to work in threes, so it seems Mass Effect 1/2 - Too Human and Fable 2 are their big push for the WRPG genre and Lost odyssey, Tales of vesperia and Last remnant seem to be their push in the JRPG genre.

• Motion controls will have been out for 2 years, so if assuming they started implementing plans for their own control scheme along those lines straight away, this will be about the earliest they can release anything with appropriate support. So perhaps for Nintendo this will be the first time a competitor has attempted to compete directly with them this generation on their home turf. It is foolish to discount a Microsoft counter-attack as destined to fail because as 2nd movers they have the advantage of hindsight so they can release a better implementation of motion controls and they also have their massive advantage in the PC arena to leverage. These games include - Will wrights creations - The Sims/Spore, their own Starlancer/Freelancer space sim - the niche but still viable adventure games genre - practically any Pop-cap/equivelent makers game, perhaps in a compilation. They also have their very own Mech Warrior franchise which is reasonably big in its own right. Even beyond all this they can really start getting all the educational and kids games which are solely mouse driven and do a straightforward port. They can cover all areas of the market with a motion controller, all they need to do is pump enough money into getting the games out there. They have the money. Im not saying they WILL do it, what im saying is that they could do it better than most people here would give them credit for.

The only question now really is. "What are Microsofts goals for the Xbox360?" They are sitting uniquely on a position of success or failure. These next 6 months, and especially E3 will have a huge impact on the future of this console. They have 3 SKUs to position in the market, perhaps they will move to distinguish them further than a price/feature scale. My personal belief is that one possible change will be an Xmote Arcade a cheaper Pro with a larger HDD and wireless and an Elite with Blu ray would do just that.

I don't think there motion controls will be too big. For 3 reasons
1 It doesn't have an attach rate of 100%.
2 Not too many casual games to go with the motion controls, and to compete with nintendo in the casual area. Nintendo already has a big expansive of casual games.
3 Most projects that utilize motion controls will most likely be on the wii. This mean less people will have a motive to buy the 360 mote.

Critical for what is the key, as you said? More than likely MS's goal is to turn a profit. So they'll announce things and do things that'll help them achieve that goal.

Microsoft has gone out of their way to say they aren't going to bring out a Blu Ray 360, and this from a company that "does not respond to rumours or speculation"

I don't believe in the x-mote and at this point consider it a rumour.

In my opinion, Microsoft games division is loving life and won't change much.
They have made some money
Sony is no longer dominating, hence they're less of a threat to Window's doominance of home entertainment
The 360 will outsell the original xbox soon

Well due to their pc advantage motion controls could give the 360 near complete dominance over the RTS genre. The last command and conquer game sold half a million without motion controls. Halo wars with motion controls will sell many millions of copies. Now if we assume the xmote will be bundled with halo wars and maybe the next banjo or viva pinata that means that enough people will have the controllers to warrant games support. Halowars could push the xmote like wii fit is pushing the balance board. The glory of targeting the RTS genre is that since they'll be targeting the hardcore with it, it wont disillusion the current fanbase.

If they bundle it with viva pinata they can also then make a case for all the casual developers on the pc. Which is a huge market.

Here was the whole microsoft plan for the 360...

Step 1
Release system earlier than competitors

Step 2
Steal underpants

Step 3
?????

Step 4
Profit!

Fixed it for you

Blasphemy!

Actually Nintendo has shown the value in educational products in the market. There are a lot of educational products for people from the age of 3+ on the PC and it should be a relatively simple job of porting.

A lot of what they do now is simply filling the gaps of their lineup, they need to provide something for everyone from the age of 4+ and educational games fill that gap quite nicely. If the 360 can be used for teenagers and the little kids then it obviously has much more value to families.

 1. Companies can be profitable selling to submarkets of 10million or less. Particularly when the games are ports, like educational or PC games. Its just extra profit. Initial investment begets growth with begets additional support. Also they have 7 more years to implement motion controls, this is long term we're looking at.

2. Actually its an airmouse + motion + perhaps positional controls. Airmouse = standard 2 button mouse essentially. The typical implementation of controls is a mouse plus other functions controlled by motion instead of buttons. Spore+Sims are as big as Mario and Zelda. Also the PC is THE place for casual games, the market existed on the PC long before Nintendo went in that direction.

3. Most developers wouldn't turn down extra development money to add motion controls into existing upcoming games. If motion controls are an obvious evolution then it stands to reason that the uptake of them on the 360 would proceed at a steady pace. Theres also the perenial favourite of stealing any good Wii game they can get their dirty hands on. Also if they're looking for development experience then the first place for them to start would be the games already being developed.