In 12 months from now, the Xbox360 will be at 40 million consoles sold. This is enough to guarantee 3rd party support at its best. The Xbox360 is very good at selling software and digital content, publishers know that. So, you won't have to switch to the PS3 unless you want Sonys 1st party games.
I don't know how MS wants to counter, but I guess, they will make it. Some new SKUs with bigger HDDs, a $50 pricecut for the pro / elite might help, make some coloured Xbox360s or whatever.
I really think if MS advertises the new features like Facebook, Twitter and Last.FM + Netflix well, they really have a shot at a successful holiday season. There is NO doubt that Halo ODST, MW2 and Forza 3 will do awesome things, but these features + Guitar Hero, Rockband, 1vs100 and Lips MIGHT touch some (female) casual gamers.
Imagine not having GamePass on your console...
