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kingofwale said:
I think the real question is.. how do Xbox distinguish itself from PC games.

Most (if not all) PS3 games won't see another console/PC, that's for the likes of R&C, Uncharted, Warhawk, FFXIII, MGS4, GT5. But you can't say that for most of 360 games.

 I don't think the PC issue is as important as people make it seem.  Since a gaming PC is many times more expensive than a console the majority of people will pick up the console version. 

 As for how the two companies can differentiate themselves from each other, I don't think there's really anything they can do this generation to truly set themselves apart.  A strong lineup of quality first party titles would help, but as noticed in the OP, gamers preferences will steer some towards one console, and others toward its competitor.