It will be interesting to see the impact of MS's game studios/technology in 3-5 years. By then, TVs and/or sub-$100 set top boxes will be thoroughly integrated into the post-PC app ecosystems and will be powerful enough to run fairly sophisticated games. It's not hard to imagine Blizzard/EA/Ubisoft/etc. targeting the most ubiquitous platform before the "dedicated game consoles", at which point the console game will dramatically change.

So the question, to me, is not the future of the XBox so much as whether MS can leverage their impressive game technology to get a foothold in these emerging ecosystems. I'm generally not a fan of WP7, but the games have some very impressive technology and I think their studios could make something of a completely different caliber than anything Gameloft/Chillingo are doing. If they can create a groundbreaking Halo or GTA-like game phenomenon on their phone platform it could be their best chance to stay relevant in the consumer space.