Things that need to happen to give the XBox 360 a chance:

1. $100 price cut. Because of how long it has been on the market without major price reductions, I believe it is safe to say that anyone who wants an XBox 360 at its current price level probably already owns one. Microsoft needs a fairly major price reduction.
2. Large 'Platnium Games' library. It should be (somewhat) embarrassing to Microsoft that 30 months into the life of the XBox 360 they still haven't produced a formal 'Platnium Games' library; if they dropped the price of many of their biggest games from 2005, 2006, and the first half of 2007 and advertized (with cherry-picked reviews) the high quality nature of these budget games people would see the value in the XBox 360's library.
3. The announcement and release of some games that have a much broader appeal. The XBox 360 has built a reputation as a great place to play Shooters, Racing Simulations and Realistic Sports Games; Microsoft could really use some kart-racers, cartoonie sports games, puzzle games, trivia games, and several other games in a variety of genres which a large portion of their current userbase would see no value in.

X360 was designed to be third, there's no way its sales will get better as time passes by, no real reason. X360 is ahead cause of the early start, if it wasnt for that....

 Well said.

OT: Look, adding something the competition has had since launch will NOT increase your sales. This is precisely the reason M$ and you Xbox fanboys aren't worried about Trophies and In-game XMB getting people to buy PS3s. (Of course getting the same thing on PS3 that you have to pay $50/year for on 360 COULD hurt sales, but that's another story.) M$ had the perfect opportunity to seriously knock Sony down and maybe even out of the competition. (I mean seriously, what was Sony thinking when they tried to sell a $600 console that had NO games) But M$, as it seems to do so often, managed to snatch defeat from the very jaws of victory. RRoD, no standard HDD, no standard wireless, half-assed support for a (soon-to-be-necessary-for HD gaming) next-gen storage medium, still insisting on charging for basic online multi-player gaming. Seriously, what year do they think we are in here? Do they think this is the '90's where you had to pay $30/month for 31 hours/month of 24 kbps dial-up? With all the problems and flaws that Sony's marketing plan had in full bloom and the 360 having one of, if not THE best line-up a console has EVER seen in one year going for them, the PS3 STILL sold like 300k less for the year. This year is do-or-die for the Xbox 360. If they can't turn it around now, they never will. The PSWii will fill the gaming niches and shove the 360 out.

 But it seems a good amount PS3 fanboys "speculation" has come true. GTA helped Sony hardware more than Microsoft. The PS3 has outsold the 360 worldwide since last year. Neither MGS4 or FF is coming to the 360, yet the 360's best exclusive last year IS coming to the PS3(Bioshock). Blu-Ray won the format war.

 Sony and MS make pricing decisions based on a number of factors including cost of production, perceived demand and market saturation at the current price, budgetary concerns, etc...  With a product like this the price of the competition isn't as great a factor as many PS3 fanboys would have us believe.  Just look at the Wii if you want proof.  It has sold phenomenally, and at a lower price, yet you don't see MS and Sony rushing to get below $300.  Furthermore, the 360 EU price cut elicited no response from Sony even though members here predicted a massice ractionary price cut for the PS3.  Sony will make their own decisions based on their own business model.  The Least important factor in those decisions will be MS's actions.

the 360's biggest advantage is its game library, but as time goes by the ps3 is getting closer in terms of good games. If any company should be worried itd MS, a PS3 price cut will hurt the 360 alot.

http://www.engadget.com/2008/04/21/ps3-to-get-smaller-cell-and-or-rsx-chips-in-august/
http://www.joystiq.com/2008/02/01/rumor-ps3-slim-coming-this-fall/
IF THIS TRUE - THEN x360 IS DEAD in terms of sales.

 Shh, not having reason is the definition of 360 fanboys...

 Each company designed their consoles trying to finish at the top...including Microsoft.

Those people saying Microsoft aren't serious about their 360 are confused.  Microsoft is aiming to finish first! It doesn't mean they will, but they will try their hardest too.

That's why the 360 is getting games like Gears 2, Fable 2, Ninja Gaiden 2. (fully exclusive)

That's why Microsoft want's a Wii-mate controller type thing.

Thats why Xbox Live is maintained to be the best service for online gaming.

That's why XNA games will be coming to the 360 next year.

I'm not saying Microsoft will finish top this generation, but they are really trying to.