And this is what is important.
I don't mind, or disagree, with repackaging the 360 at a $149 price point w/ Natal and calling it 'Mr. Pink Fuzzy Family Fun Machine!' and marketing it towards the market that everybody believes is buying the Wii.
(I'm not still convinced we've got that divergent of markets, or that market is interested in remaining interested in products like this generation after generation.)
But I foresee huge problems if MS believes that Natal can add significant legs to the 360 in terms of delivering for their main demographic - the hardcore gamer.
We want better games, larger games, pretty games, more graphicly intense games, better AI, etc. There's lots of improvements to the gaming experience that require additional CPU, GPU, RAM, storage capacity, even if you don't believe the cost/benefit ratio of graphic enhancement is worthwhile.
I believe the console cycle will be longer, but not significantly so.
IMO it will be extended from the typical 5 year, to a 7 year.
2012