The slowdown reflects real indecison on MS' part.
MS was supposed to release a new console in holiday 2012. I've seen bits of it. This was not going to be Kinect, but would have Kinect bundled. There would be an heavy emphasis on online streaming services. This is apparently not going to happen.
I'm told there are odd sticking points, the big ones are apparently streaming content deals and MMOs. Apparently they want the "XBOX 720" to be a drop-in replacement for cable television with ALL of the content you could expect to find on Dish or DirectTV. They also want to get in the MMO space, but are wary given Sony's dismal efforts.
MS wants "one box to rule them all" and and this point seem content to let early adopters thrash around with Google TV, Apple TV, Boxee, etc. while they slowly prepare their alternative, quietly signing content deals.
MS also is wary of cost. Everything about the new console screams "requires massive hard disk" and MS is worried about the cost of shipping a console with a 500GB hard drive. It's going to be a lot more than $99 and it's supposed to be compeitive with $99 products. Plus, the market will probably want it to have a Blu-Ray drive and MS really doesn't want to do that.
There is also the tablet market and how that is going to affect gaming.
Basically, MS seems to be pretty sure that they'll have to sell the "XBOX 720" at a huge loss initially so they're very hesitant to commit. If Sony wasn't spinnig their wheels and the wii U wasn't poised to be a disaster I suspect we'd have already seen the hardware annouced.
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