I think another likely inclusion would be IPTV, this really would make it a central media hub and be the ONLY thing needed to connect to your TV.

DVD/Blu-ray player - elminated with Netflix
Set-top box/Tivo - eliminated with IPTV

They'll also more than likely get the Zune marketplace on Live so you can download songs and play them straight on you home theatre, which I think is more convenient than downloading on PC and then syncing with an Ipod and then putting the Ipod in a dockstation connected to your home theatre.

I think more RAM would reap more benefits too moreso than GPU/CPU as the high res displacement/normal maps are getting massive.

@ fumanchu Exactly my sentiment.

I almost agree with you. Except that IPTV will actually work on the 360 before the next gen. It was demonstrated in CES last year and I think will be deployed soon in the UK. Same goes with the Zune. There were public announcements from Microsoft about it already.

Don't count countries. Count relevant markets. Over 90% of the 360 current sales are to markets in which there is no problem with digital distribution. By the time the next gen is released it will be over 95%.

Yet games are getting bigger and bigger with higher-res content. More RAM will mean using more detailed textures, these take up more and more space. By the time the next-gen starts a standard HD game could be around 25GB+, this is still a lot of data even in 3-4 years.

Currently there are around 14-15 million registered LIVE users out of 23 million console owners. This means that by switching to online only it would cut out 1/3 of their user base. If MS wants to make a "casual friendly" console then they CANNOT switch to a pure digital distribution model. With the recent price cuts, the Arcade 360 model is making up 50% of it's sales, the arcade is not able to use LIVE for online, so how could you possibly cut out that much of the market by moving to a model that predominantley only the hardcore supports?

Regarding the size of the games - this is not really an issue for digital distribution. You can start playing the game after 500MB were downloaded while the content for the next levels is continously downloaded in the background. Technically - there is just no need for the whole 25GB to be present at the same time on the console. As a sidebar - 25GB games are super-expensive to produce, don't expect too many of those (but this comment is off-topic).

"With the recent price cuts, the Arcade 360 model is making up 50% of it's sales, the arcade is not able to use LIVE for online"??? Who is feeding you this misinformation??? Please take note: The Arcade is fully Live enabled. I am using it at home and watching netflix.

Regarding the mandatory Live subscriptions - First, this is indeed a change in the business model and like any change there are some risks involved. That said, I regard the risk level as fairly low. Consumers are very much OK with subscriptions for content and information services. Cable TV, Cell Phone, Internet Surfing, Netflix, newpapers are all examples of that. Games, content and entertainment are just one more of those services. It's as natural as moving from purchased DVD movie viewing to cable TV based subscrition movie watching. The users are already shown their willingness to pay (even when some alternative seem free) - that is a great indication that this going to continue to be a very successful model.

Another cool thing i'd like to see implemented on Live would be Skype, I mean you've already got the headset and internet connection.

Man, if everything goes the way we're speculating Microsoft is not making many friends from dvd/blu-ray manufacturers, tivo, game retailers, and if Skype goes on telecommunication companies...wow alot of people will be out to see them fail.

• Remember developers! : Currently X360 and CELL architectures are alien to PC architecture and make things more complicated. Making console like original Xbox was would bring more developers as using the system would be very easy for anyone who has programmed anything(After all you always start with PC.).
  

Yes, MS should introduce some sort of waggle thingy, more capable wiimote copy or include some new controller technology like multiple touch touchpad or camera based controlling(Minority report like thing... :) ) for example.

I think also that restricting resolution to 720p would be a good decision. I know that there are ppl with 1080p TVs waiting for next gen to really be able to use 1080p resolution, but as you have seen that resolution comes with a price. Most games today run horrible and are locked to 30fps, which just isn't enough for intensive games. Actually restricting resolution does make graphics look better too as GPU processing power doesn't go for handling larger resolutions.

Excellent point - Developer supprt is critical.

That said, you have to give Microsoft credit in this department. The Microsoft programing tools and libraries are superb. Try using XNA and you'll see that building games can be done at home.

I think the point must be to maintain this level of Developer support.

Sorry, I thought you needed a hard drive for online multiplayer, I guess I was wrong.

Even so the point is still valid, only 2/3 of the XBox 360 owners use LIVE, which means an online distribution method could cut out as many as 1/3 of their market.

The fact is that digital distribution is a sure fire way to scare away the casual market they have worked so hard to build.