Hardcore gamers as such (not just guys playing halo) represent a small part of the market, nowhere near as big as casuals are. And casuals want simple games with motion, therefore Kinect. Unless it fails miserably, I see MS going that way for the foreseable future Lets be honest: It wouldn't be the first time we get the axe because the mainstream market wants something else...
When I think hardcore gamers I think the people from college and uni that have extreme PCs and play CS online and have the settings nailed down to a tee to get even a slightly faster frame rate than anyone else.
You just said hardcore gamers are MS's core audience and now this? and now according to your new description: how many of those have a X360? most of them laugh at consoles... Casuals are the market, it's been said to the death yet some still believe it's the 3% (WE) the ones that matter
What the industry refer to as "core gamers" are the 18-25 adult male Gears of War crowd. Platform agnostic, really.