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The 360 is expensive and you have to break open your system and pull out a soldering iron to mod it. Only the most hardcore of hardcore are willing to do that. With the PSP, you just pop in a battery pack and you're good to go.

The ease if what makes 360 piracy small enough to have no real impact. Now, if the 360 was like the Dreamcast where all you needed was Easy CD Creator and and an internet connection, I think piracy would be a major issue.