The Internet rumors are pointing to a deal with Microsoft. I can see where this could be mutually beneficial. Microsoft will get Sega to develop a few exclusive titles (something to help them gain marketshare in Japan) and maybe Sega uses Microsoft's servers for some kind of streaming deal.
A lot of people seem to think the XBox will be branded as a Sega console in Japan, that would be cool to see but the branding by itself wouldn't help much unless there's exclusive content to go with it.

