Yes, I think MS realised that they dropped the original Xbox (do we now call it Xbox Classic?) too soon and that annoyed some people. They also realise how big their user base is for the 360 and know that not everyone will get an Xbox One on launch day. This isn't unheard of in other gaming companies either. Sony stopped manufacturing the PS2 only last year. Good news for all gamers
Indeed, i think it will end up been sold as a media box / streamer around the price point of the Apple TV. I could see people buying it for that purpose of the requirement of Xbox Live gold membership to use services like Netflix was dropped.
With a back catalogue of cheap retail games and arcade games i can still see new people enjoying the 360 over the coming years.