I could be wrong for sure. I'm just not convinced that people want to play last-gen games in any large number. The marketing for the new consoles will be massive, and I think the mini 360 or whatever will get trampled. The difference could be if it's capable of playing new stuff entirely, and it gains success there. For example, buy new Xbox SF game, get free Xbox mini version as well. Or some decent exclusives. And throw in new Arcade games. If Xbox live has the little downloadable indie games, if they work on both consoles, it could work out somewhat.
Still, the masses are definitely wanting the new CoD, Halo, Madden, Forza, etc.
I think 5 million is a niche device really, particularly when you think about how many actually get used. I have both a WD Live and a Roku, and they're long since stuffed in a drawer, and I've never met anyone else who owned either of them. When any new decent TV can already do Netflix/Hulu/Pandora/etc out of the box, and HTPCs do it even better, it doesn't leave a lot of room for the mini, outside of last-gen era gaming. IOW, it will appeal only to gamers, specifically a subset who would rather play last-gen than next-gen (or want to move their 360 library to it instead of keeping their 360?).
Microsoft has failed before, I think the new Xbox will be a success, but am not sold at all on who exactly the mini will be successful with. Sometimes it's not even that their product is bad, there's just not room in the market for it. I have a couple Zunes, they're actually awesome music players, but that was a late entry into a dominated market, kind of pointless.