They still need to make the Kinect an option and retail the box for $399. The best news is how Microsoft actually listened to customers and reacted so quickly. If this is any indication of how Windows Blue is going to change Windows 8, then good things are ahead.
I'm not a gamer, so this may prove a stellar display of my ignorance in the area, but isn't Kinect a desirable feature to gamers? A critical component of the Xbox game experience? It seems to me the larger market is non-gamer consumers who will use Xbox as an entertainment center, and use the other features - Skype, internet, movie streaming, recording, etc. Given the larger market is outside gaming, wouldn't it make more sense to make the game portion a modular option? (And keep Kinect, just because it's cool to use hand motion, and you need a camera anyway for Skype).
I agree the price is high, but I expect to see heavy discounting fairly quickly, after MSFT makes $ on the "gotta have the newest tech" segment who will pay top dollar for new stuff.