I beleave Microsofts costs are due to they feeling that the xbox is a video game console and as such it should ship completed games. Patches I think are to them a failure from the publisher and the high cost of a patch is a kind of find. We might not live in a world any more where games are completed before release like they were on early consoles and perhaps Microsoft should change this. But as a gamer AND a developer I really would want games to be done and working prior to release.
Something in that picture reminds me of Ashton Kutcher. Bio-pic? Seriously though, he did in fact change the world in just a few years. My 2 year old daughter laid her first puzzle on an iPad, not IRL.
The controller is a screen that the box streams the image to. It is the same thing as rendering two screens (you know the thing with split screen being bad for framerate because it is rendered twice). Rendering more screens will be too hard for them. I had a look at it and I think the screen looks amazing and it's a very interesting console. If you could play online everybody playing will have one of those controllers. I think it's gonna be great, perhaps couch multiplayer should not be featured that much at E3.