I don't want to sit here and say that the Kinect looks completely stupid. A plastic box you stick on the wall or in front of the television doesn't really seem stupid, but imagining yourself flailing around like a monkey on fire doesn't really look smart. For all their posturing and proclamations, M$ doesn't seem to be putting a lot behind this product for the release, with only a handful of games for a while. That doesn't really inspire confidence in me that they want to really get this thing to sell, although from a business standpoint, I can understand them not wanting to put a lot of money behind something they aren't sure is going to last. Apparently though they feel that they can sell enough of them to make their money back to continue on with this.
If they (or Sony) can take this motion-control craze and have it appeal to a more adult audience (by which I mean content of a serious and violent nature, not sex you perverts) instead of some cutesy little cartoon graphics of an panda fishing, then I think the appeal with speak for itself. Bringing the technology to the "hardcore" gamers by bringing in some games like GTA, COD, or Street Fighter might encourage more core gamers to back this device.
It will probably take them two or three years to drop the price, unless they get into a price war with Sony once the Move hits the shelves and consumers get confused about which one to spend money on.