Essentially Millions statements are roughly grounded in Economic reality.
If you consider the Xbox 360 and the PS3 to be rough substitutes, and in this relationship the PS3 is considered the better alternative, whilst the Xbox 360 is the inferior good. Essentially most people like butter more than margarine and the PS3 is the butter. (In general)
Now in this relationship Microsoft can:
A. Increase the value of their offering - Games, features, percieved quality, reliability, freebies, advertising etc.
B. Decrease the cost of their offering and hope to draw new people into the market and steal a few sales directly from the competition as they substitute PS3s for Xbox 360s.
C. Hope for positive word of mouth or essentially the "Xbox 360 is the same as the PS3 only you're not paying for Blu Ray" or the "Margarine actually tastes about as good as butter mmmm here did you notice that toast I gave you had margarine on it?" effect.
Now they can do nothing about reliability perception until next year when the slim model comes in. It took that long before some people got the PS2 due to reliability perceptions and many waited for the slim model to do so. If it looks physically different then people will percieve it differently because the Xbox 360 still looks like the one that had those 'issues'.
They are using A and B to positively effect the install base but the main impact on everything they do is actually in the C column. Advertisements are not going to win overall public perception, they have to give their advocates - people who own Xbox 360s and recomend them to their friends ammunition. If they lose the install base race then it doesn't matter what they do if they lose the battle on the ground in the minds of their consumers.
Tease.
