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I think there should have only been a CORE SKU.

Microsoft wants the PC to be the "centre of home strategy", so what they should have done was:

- let developers assume a HDD was available
- let the 360 use a partition from an ethernet linked PC for it's HDD
(cheap, and make it as big as you want)
- offer a small (20 GB?) HDD as an add-on for those not wanting/able to share a PC

The machine would have been cheaper (for most) and they would have took advantage of one of their supposed goals (PC importance)