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MS are moving away from the core for two reasons:

1/ They want to push people online - hard to do with the core.

2/ Future games may require hard disk support. 

My understanding is that sales of the core have been pretty weak anyway.

This also positions the 360 more against the PS3 than it does against the Wii. Maybe MS have ceeded that part of the battle, and just want to focus now on not letting the PS3 overtake the 360 (anytime soon).

...

If the PS3 does manage to overtake the 360 anytime soon (i.e. 12 months?), its basically goodnight for MS (for this generation anyway).

 



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