Will you buy it?

Xbox is built around directX, which is the heart and soul of PC gaming.

So, why not make it compatible to play PC games? That will give it enormous library the moment it gets released.

With the pace of technology, the next generation of Xbox should be able to handle PC games easily, possibly with some exceptions.

HDD installation is being made a norm by Xbox 360 and PS3 at the moment. So, by then, installation is a moot point.
It should also be relatively cheap.

Well, this fails in the sense that if it's top of the line PC hardware (which is needed to play top of the line PC games) it's not going to be cheap. Then again, in order to play PC games for the five years, it would needs to have upgradable hardware and Windows. And it would only play PC games. Wait, we already have STB PC:s with standard electronics design.

Unless the next version is based off x86, I don't see any realistic way that you'd be able to emulate a reasonably fast system. They may use directx, but I'm sure most games also take advantage of the processor.

No...

...but...

I could see dual versions - both PC and 360 (like Mac and PC now) with shared assets, etc. But because of Xbox/Windows Live it will require the player to be online.

Maybe, but if it does not run emulators and Dos games then forget it.

That'd actually be pretty cool, but, a couple years after it's out PC games will have requirements that would go beyond it's capabilities.

It doesn't have to play the new games or able to play those that are topping its specs.

Assuming it's coming out in 2012, and comes with full PC backward compatibility for all games that are released that falls under required specs.

Surely, people are going to install their PC games on it. I would.

If microsoft makes it pc compatible they'll lose a bucket-load of royalties from the chunks of money they from each 360 game sale. Why would they do that?

Why would Microsoft invest in games it does not make a huge margin on? They already own the pc gaming market afterall (although I do currently play COD4 on my Linux system)

If Nintendo or Sony put Linux on their system (by default that is), that would be interesting and a huge blow to MS. Pc games on a 360 are completely uninteresting for them and would allow piracy on a PC level making the platform dead from the beginning.