... So what Should the XBox team do now?

As I mentioned in my previous post, the XBox team has a bit of catching up to do, with the loss of the HD format wars giving the PlayStation a nice boost.

So what should they do?

Focus on the software. It's one of Microsoft's core strengths anyway. People buy value, so the BD-PS3 combo seems like a better value than the XBox 360 console when all other things remain equal. But by focusing on encouraging game exclusives, delivering better value as part of the Xbox by improving its software and add-ons, Microsoft can deliver better value in the area that matters most - games. After all, this is a game console war - if they can deliver a significantly better gaming experience, they can still win.

Update: And they're doing just that. This one isn't over yet. The next few months should be very interesting.

Console War Update

Microsoft has dropped the prices of the XBox 360 in an attempt to remain competitive with the PS3 (as I had predicted in January). The new price for the 20GB Xbox is $299, which is $100 cheaper than the cheapest PlayStation 3 (40 GB). However, an XBox 360 + standalone Blu-Ray combo will cost you at least $100 more than a PS3.

In the meantime, the end of the Hi-Def wars have seen accelerated sales of the PS3 vs the XBox 360, with the PS3 now outselling the XBox.