I’m sure that M$ is working on the next Xbox, and chances are they started working on it as soon as they launched the 360. At its core, M$ is a software developer, and M$ is prolific for its iterative rollout of technology and products. Let’s look at the Xbox family thus far…
The original Xbox was basically a gaming PC in concept and assembly, and the reason for it’s short lifespan was probably more to do with terrible logistics of components, than poor sales. The create a problem for the 360’s rollout, since this eliminated M$’s primary advantage over it’s competitors…it’s software prowess. So, while the original Xbox was a very stable and sturdy product, with extremely great potential, it lacked the logistical support to bring forth the umphh required to make a new product stick in the gaming business.
M$ learned a lot from the original Xbox’s, and while RROD was a serious (almost deadly) setback, they were able to deftly turn it to success, thru the lessons learned from the original Xbox launch. They pushed XBL to the forefront of the Xbox experience, and did it in a profit generating way to supplement software sales and accessory sales, in the profit margin side of the losses incurred on console sales. They used their technical prowess to establish a programming environment that is “comfortable” for developers to use. They work with 3rd party developers and publishers to make the 360 the defacto 3rd must launch platform, at the very least.
So, looking ahead, with Natal on the horizon, they are using it as a stopgap measure to refresh the Xbox brand before the next console launches in 2-3 years. I fully expect that the next console will be a sturdy design console to erase the RROD stigma. For anybody who’s taken a engineering reliability and systems engineering course, it’s very evident how M$ took chances with reliability, and got bitten by it, but they had a backup, and whether you agree with the methods, the results are sound. The Xbox 360 console is nothing more than a hallow box, and what you pay for is the Xbox experience, so if your box goes kaput…not a problem, just change it out…sure, you’re a bit annoyed at it, but it in no way overcome the joy the consumer achieves with the Xbox experience.
Looking to the future, M$ is probably going to make it even easier to program for their next console, and just like a PC, they are going to give developers more tools and options, but fundamentally, the developers won’t have to do much shifting in how they do business…this will reduce/maintain % of increase in cost to develop for the next generation, imho.