The Xbox 360 Arcade/Core has been hated for a long time now but I feel the hate is overrated. Main issue people seem to have with is the lack of a hard drive and how expensive it is compared to the pro though the Arcade version did make it a better value with the 5 free games and memory card though the pro would still be the way to go.
In terms of the hard drive people usually refer to the devs having an issue with it as we seen recently the Bourne Identity dev complaining among others like Assassins Creed having issues fitting etc. Quite honestly if they want to use the hard drive then they can because MS doesn’t make it a mandate that you have to make your game compatible with the Arcade/Core though obviously it you would decrease exposure of your game to that small population or the way I look at it if it is a kick ass game then those people will upgrade and buy the hard drive. As far as I know and please correct me if you have a link or source no game has been cancelled for the Xbox 360 because of limited space issue. Now I know there are games that haven’t even been made or showed that devs have said potentially might not fit but until that is truly proven to be the case then it is a mute point. Finally the beauty to all this is that those same devs could easily just require the hard drive for their “uber” game since according to the Data the Arcade/core it is a small portion of the 360 installed so sales shouldn’t be highly impacted. Basically if it even becomes an issue about space the hard drive is available kind of like Burnout Paradise requiring it play online.
Now that we got that issue out of the way since again it seems to be the most prevalent one when talking about the Xbox 360 Arcade/Core lets talk about the good thing this system does for Microsoft. The main thing the Xbox 360 Arcade/Core does for Microsoft is provide flexibility. It allows them to have a cheaper model which soon will actually be cheaper then a Wii. It allows people who may just want to play games a chance to afford one and now with the new memory card included save their games. This is perfect for many previous generation owners who only bough their systems for games like guitar hero, ddr or now rock band. That lower price gives you entrée into a huge library of games that do not require a hard drive to play just like the previous generation. Not all games have to be huge to be fun so you can make great games that will run great without needing a hard drive etc. By the way you can go on xbox live and play with the memory card that comes in with the Arcade so if you wanted you could play online of course unless is Burnout Paradise heh. Bottom line the Xbox 360 Arcade/core works great as a plain video game system. All you have to do if you ever wanted to get into downloadable content is upgrade but there are many people who still haven’t found the internet so the Xbox 360 Arcade/Core is the perfect solution.
Obviously there will always be second guessing just like I still feel we should have had a hard drive with every 360 but is really not as bad as it is sometimes made out to be.