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More good than harm. With ease of development on the 360, and relative difficulty on the PS3 (at least as all the 3rd party developers keep saying), it gave them a chance of at least competing this generation.

If they had come out side by side with sony, I think they would have been relegated to a distant third again. They haven't made the best use of that year headstart, and RROD definitely hurt, but it has kept them in the game thanks to Sony's mistakes.