Core and Arcade Xbox 360s are missing something super important: a HDD. That means developers must make sure their games can work without a HDD so a segment of users aren't totally screwed. Rory McGuire, lead designer on PS3 title Bourne Conspiracy, says:

In retrospect I wish Microsoft had made the choice to have [mandatory] hard drives like Sony did with the PS3... They did it with the original Xbox. I'm not sure why they decided to not require a hard drive on the 360. From what I understand they don't move many [Core/Arcade] units... Developers certainly benefit [from a hard drive]," he went on to explain, adding: "if you have a hard drive, the whole game loads faster. Obviously you'll be facing a short install time, but the developer benefits from it and you definitely benefit from it as a player... So I think that was one of the mistakes that Microsoft made with the 360.

Another mistake is of course made by the people buying the Core/Arcade Xbox 360s.
No HDD "Mistake" [CVG] [Pic]