As we say in french "mieux vaut tard que jamais" should translate in something like "better late than never".
It could sell well if MS swallows some costs and bundle it with some games also coming to the wii.
Think about the last football game on wii, if MS makes sure the new the controller is bundled with the game then the editor will follow, they won't have to think to a new gameplay mechanic and they can leverage a bigger market.
If it costs Ms money, the 360 may start to look as Wii HD and thinking forward it could help limiting the impact that could have an early Wii2 launch. By the way if MS want to try the sooner the better
EDIT some more though,
In France (and I don't know localized are their ads) MS really fail to give the 360 an strong identity.
They are in the middle of Sony and Nintendo, and they have a hard to identify themselves.
At this point why not copy Nintendo?
They can't afford something new, wiimote+nunchcuk has gain acceptance in consumers space and editors who start to find way to use it. And Editor won't design game-play for pad, sixais, wiimote, etc.
So it has to be a copy paste of the nunchuch, if possible perfected.
Sony has gained traction from its format victory and have some strong games coming. Sony has just introduce DS3 (I'm not even sure that it's available right now in Europe) I'm not sure they can offer something new now, they would have to wait some few.
If MS chose something really really close to nintendo offer, they somewhat set a standard, Sony would be left alone for sometime (in regard to costumers and editors).
If MS announce this @ E3 it could an incredible way to differentiate themselves (for sometime) from Sony offering!
Imagine Madden, fifa, pro evolution soccer, in their hd glory played with a wiimote, I don't even want to speak about the bunch of fps available on the 360 if MS manage to to make the device transparent to software (ie you can play all games without patch, the os would take care of it).
Think about some guy using a wiimote as a chainsaw while playing GeoW II, that would set Ms apart to whatever Sony offers.
So about the timing once again, the sooner the better!
And don't be greedy MS, subsidize for it a lot and push as much bundle as you can!!!
In fact thinking twice about it, it's really now and it would an outstanding way to break sony momemtum.
Huge opportunity there.
EDIT2
thank again about it.
It their best chance to gain mass market adoption! So the more I think about it the more I feel that ASAP should be their goal if they have some business sense.
The arcade is @199 euros and should be soon @199$ in US.
It just makes so much sense now that the wii has crushed the competition.
old heighties song "fight fire with fire"