The XBOX Live is the only way for Microsoft to succeed...
They should focus more on it...
If PS3 is backward compatible .. then Microsoft will have a tough time...
But Kutaragi did said its backward compatible with all its PS games...
XBOX 360 backward compatibility is still questionable... but if you think again on how many xbox games in the market... Compatibility might not be 100%.

Revolution might be a gd competitor... but its target audience are not really like XBOX 360 and PS3.