haha microsoft cant respond there is nothing they can do to respond to the awesomeness of the ps3

I believe that Home is the future of communication. It will always be smaller than MSN or Myspace, but it will certainly be next gen to the casual market. The problem is that the PS3 (I believe will never be that big to embrace that casual market.) Than again it has it chances on the hardcore market to be a WoW entrance point to a wide variety of games to discuss strategy. Eventually Home will be a standard in gaming.
So how will Microsoft respond? Well although Home hasn't been released they already have responded. In the future it won't be enough. Because avatars are not the future. The room in which the avatars live are the future. And that's what the PS3 is delivering. In my point of view Microsoft still needs to improve.
Be fair a avatar that looks the way you want it to be is nice. However as a gamer you are buying games and you have to be curious about the Home area of a particular game to be involved. It will be the ultimate meeting point of a game without a question. Gamers are almost always looking for success. Just like athletic sportsmen.
In the end how will Microsoft respond to Home. Well just avatars? That's 100% not enough. So is it the arcade version that stops the improving? I think it is. Next generation Microsoft will have it's own Home. However they will be saying that it's just unnecessary up until now.
One thing is for sure MSn and Myspace won't stay forever and it will be taken to the next step. It will almost certainly look like Home.

The reality is Home (as have trophies) has come too late. It wont make a difference in the grand scheme of things. XBL is superior where it counts, and thats games content. Look at the summer of xbla for example. The sales are booming.

Halo 4,5,6.

Sony doesn't understand how online communication truthfully works. They might have learned a little something during the PS2 era from Microsoft, but they obviously didn't learn enough. The avatars was not an answer to home, but in actually Microsoft decided since Sony is going to have avatars and the Wii does as well, why don't I do it? So they did it. These avatars will be used in games like Monopoly, 1vs 100, Uno and alot more family and party games. This is much closer to Wii competition than it is paying any mind to the PS3's nonsensical and outlandish Home. Watch and learn when Home comes out. Home is amazing in a virtual community sense, but not in an online community sense. It will definatley take out the validity of the sims and second life, but not the online capabilities and genius of live.

You are right about Home not taking over live as it is. Because is a fast interface of menu's, that what a hardcore gamer wants. They just want to play the game they bought recently. There really is some growth when they implement some tactics for games like SOCOM of Killzone 2. Still I believe Second Life is for Geeks, however when Second Life will run just as smooth as MSN on every casual PC it will be far more popular. To date Second Life is still very very crappy on a Pentium 4 when you switch rooms. I´m pretty sure that Sony is on step higher on the stairs than Microsoft as you mentioned they already follow with avatars.

Yes, but they believe the Wii's example makes more sense than Sony's. They aren't exactly showing a threatened face at home. It's just another enjoyable factor for hardcore Sony gamers to change up the online experience into a virtual experience. It's not exactly a draw for the casual but whatever, it exists and it will draw whomever it draws. Home will be more time consuming than it will be quick and easy like a trailblazing online experience. I wont deny that it will give Sony owners an alternative however.

Stealing something from nintendo.
Duh

Im going to get banned for this post :(

They already stole something from Nintendo to match with home...

Fixed. I don't think it was their main intention with Avatars.