PCWorld: Okay, settle down gossipmongers, Microsoft says all this talk about an upgraded Xbox 360 is not only wrong, it's missing the point. There won't be an upgraded Xbox 360 next year, and in fact, we're only halfway through the current console cycle. What's more, Project Natal, the company's no-controller 3D motion and voice recognition technology is being designed for the existing Xbox 360, not an imaginary "performance-upgraded" one.
What we know: Natal will be sold as a standalone peripheral.
Natal will work with, and is being designed explicitly for, existing Xbox 360s.
Microsoft has no plans to alter or retool its existing platform circuitry. Aside from conventional manufacturing enhancements like thermal and spatial improvements--all invisible to consumers--the company plans to sell the same Xbox 360 it's been selling since late 2005 through Natal's launch in...whenever.
What we don't know:
We don't know when Natal will launch, though we can speculate about a general 2010 timeframe given the fact that Ballmer pegged 2010 as Natal's shelf date. Also: Sony has stated its PlayStation Motion Control peripheral will ship in 2010, so there's the competitive market incentive to consider as well.