This actually officially got announced 5 days ago but I figured I'd post it here since no one else has.

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Kinect will be launched as a package deal with a new xbox 360 console (set to be the replacement of the arcade console too btw so look out for this) the console will be a 4gb version of the new shape 360. Together with Kinect it will be priced as £249.99 however I suspect that the 4gb console will not be launched as a seperate entity since Microsoft have probably realized that the majority of sales on the arcade would have been those with hard-drives buying replacement consoles. I will say however that if it does I suspect it will cost the same as the current arcade if not a little bit more expensive and who would want to buy a 4gb console for £160 or so when they can get a 250gb one?