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Sony's best strategy would be to use the weak points of the Arcade as it's strength. Start running adds about the 360's lack of a hard drive (of course not mentioning that it's only an arcade problem) and the limits it sets on online experience if there's one thing people hate it's buying the inferior system and missing out on the best experience they'll probably never use.

Also multi-pack bundles would be a great idea, a PS3 with a game and a couple hot BluRay movies should help justify the extra expense.