The XBox 360 has not been selling up to most people's expectations but a large portion of that is Microsoft has been unwilling to price and position the XBox 360 in a way that it can sell.
Most people who play videogames see them as an inexpensive form of entertainment, or as an enjoyable diversion; they're not hard-core gamers or multimedia technophiles who care about the feature differences between the consoles. At the current price of the XBox 360 (and being that there is no budget library) the XBox 360 is simply too expensive to attract these gamers.
Microsoft should reduce the price of the XBox 360 so that the XBox 360 core is $200 or $250, the XBox 360 priemium is $300 and the XBox 360 Elite is under $400 (I would personally drop the elite); if they did this right now they would probably see a 75,000 to 150,000 console sold per month boost (long term) outside of the holiday season, and probably see a 1,000,000 unit boost within the holiday season.
