Why on earth does MS need to respond at all?
They've already caused enough damage to Sony this gen and made a big enough impact as it stands to just keep on trucking as is.
With the stellar lineup coming in software (Although I wouldn't hold my breath for Natal, it smells like it's going to be a dead fish for me) they've really got very little to worry about.
I think if you had to go back in time before the 360 launch and tell the MS guys just what an impact their console has made to so many, and continues to make I think they'd be very pleased indeed. (Although their mouths would hit the floor a bit at the news of the Wii's success!)
I would like to see how a new 360 Hardware revision (i.e. slim model) would do...

Proud Sony Rear Admiral







