These are the current rumours/facts which I am aware of regarding Microsoft. Non E3 related!
-> Xbox 360 Arcade revision to have 512 mb of ram. *rumour*
-> Xbox 360 Camera accessory. *rumour with inconclusive proof that its for the 360/coming soon*
-> Xbox 360 price cut in U.S.A. *rumour with no source just posted but fits other rumours*
-> Microsoft has completed large content delivery network upgrade. *According to JaggedSac*
-> Microsoft has taken out a $3.7B loan for aquisitions -> *Fact, but may not be EDD related*
-> Microsoft aquired Big Park an interactive online gaming company May 2009 *Fact*
-> Netflix market capitalision is $2.11B currently according to Yahoo finance *Fact*
-> Microsoft is in talks with TV manufacturers to incorperate the Xbox 360 into HDTVs *Rumour, but I have seen a video of a very NXE looking interface with Xbox 360 games and video gesture control on BBC's Click*
-> Microsoft buying 3d realms. *Rumour*
(Space to add more rumours I guess!)
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This is what I think Microsoft is going to do:
My technique here is simple, im just thinking about what I would do if I were in their shoes considering the information which is available to me at present. Whats important here is thinking about which moves would best meet their strategic interests both short and long term. One must also consider past behaviour and motivation, they did not obviously enter the console arena to just cock block Sony, they must have plans of their own for trying to win over the hearts and wallets of everyday people with hopefully compelling products for the living room.
Obviously with the new prime time channel, 100 vs 1 and the new Big Park aquisition Microsoft is going to make a fairly big push to deliver interactive content via Xbox Live. They wouldn't devote an entirely new channel on Live or make aquisitions in this area if they didn't feel it was important or an opportunity for them. So I would expect further partnerships/announcements here to be made at E3, watch that space on Live because its likely to be more important than a lot of people realise. This is the side of the business where they make the most of their money and they have to justify what people pay them, and they have every incentive to expand their revenue model here.
Thats pretty much the end of everything im sure about, heres what I predict they may be doing.
Its no secret that Microsoft has been getting cozy with Netflix and between Apples content delivery magic, the Zune HD which means videos obviously and the Zune pass which could probably be extended to movies as well. Take that and consider their content delivery upgrades and Netflix/Live integration and this aquisition makes almost perfect sense and it fits perfectly within their current business model. My bet is that they will buy Netflix and take their service worldwide via Xbox Live and maybe PC.
The Z-cam is where things really get interesting. Im assuming here that the Z-Cam is real, and that they are going to release it for the Xbox 360 because hey, if you've got it why not use it? At the basest point they need something to differentiate themselves from Sony's PS3 and the controller-less operation is the perfect fit to make the console a better media player. But the real question is how would they use it?
I would say as Microsoft main business model is in creating useful software rather than entertaining software that the first push with the Z-cam will probably be along those lines as well as the synergies with interactive Live content and netflix. I don't think they really have a clue in how to make a really fun game using the camera and such a game has never been done before. So unless a third party has a concept ready now that they can buy and/or get for the system they probably won't have many or any cool games to show using the camera to start with. I think the main winners they would show would be extending their current games scope by *almost BS level speculation* stereoscopic 3d + camera based physical movement */almost BS level speculation* or making current game control motion based such as using the whole 360 controller as a steering wheel or using gestures to perform certain tasks in games like throwing grenades.
Besides the usual games, the useful kind of software I believe they will be focusing on initially is educational type software. Its the perfect combination of ripe market, rapt audience (kids love interactive 3d), and they don't get embarrassed as easily as adults. Its also extremely easy to stream this type of software as well, the games weigh in the order of megabytes and the games themselves with static type scenes and chapter like progressions which makes everything work out just great. The other useful type of software would be some type of camera based Wii-Fit clone, but im not actually confident Microsoft could pull something like that off. It would make sense though with the camera registering gestures to make sure the player does the exercises correctly. Aside from the Wii-Fit clone which seems beyond Microsoft, it addresses the main point of weakness they have. If they can offer something for everyone, heck even a justification for owning whats obviously just a 'game machine' for families they can expand their market reach.
All your TV are belong to Microsoft.
The last possibility I can reasonably think of with the above data is that Microsoft is willing and keen to package the Xbox 360 inside other manufacturers hardware. TVs are the object in this case. From many angles it does make sense, Microsoft doesn't really care who makes the hardware or whats in it, they are a software company and they would probably be glad to not be responsible for making hardware. TV manufacturers face a market where theres little product differentiation between TVs and margins are tight. To be able to differentiate their products in the TV market would be such a boon for the manufacturers and possibly higher margins on TVs are all the incentive they need.
Microsoft could essentially offer TV manufacturers a 'full package' in regard to adding new features onto their TVs. We've seen them experimenting with new interfaces and adding Tivo and Hulu type functionality in their products. What Microsoft could offer them is a full interactive streaming (Netflix), games (Live), operating system(Email/Web), interface (camera gesture) package at a low price whilst offering the TV manufacturers themselves a kickback on products/services purchases through the TVs. TV manufactures could for the first time get a cut on content delivered through their TVs and therefore expand their extremely slim margins and differentiate themselves so as to not always compete with identical offerings and Microsoft would essentially get what they wanted with the Xbox in the first place. A way into the living room.
Tease.
Ok adding. 
