Always Online, No-used games, have to install all games, Kinect bundle with every console, weaker GPU than PS4 (1.2TF vs 1.8TF), big OS, DDR3, also assume that it will have games you will be interested in.
From what I gather it seems people have reacted mostly negative to most of the X720 Rumors that we have seem, I've seen many proclaiming that PS4 will be their only console Next-Gen. Of course people always then to exaggerate all too much, I personally don't thing most of these thing will be as detrimental as some people claim they will be, let us examine them:
Alright, I am going to ignore my dislike for certain ideas in general and examine them seriously.
Always Online & No Used Games could be actually Good and convenient for Gamers
Most people in the intended markets (USA, Europe, Japan) already are always connected with their PC and devises, and always Online doesn't imply that the console will always be sending huge packages of information that will eat your data cap.
If X720 games use the Blu-ray only as a distribution medium and lock them to your account via a one time key it could potentially mean that all games would be conveniently in your console without the need to swap discs to play them
Not to mention that without a used-games market, that opens the game for developers to offer better pricing structures like those seen on PC.
You make very valid points, but there are a couple of issues here. First, assuming that you can install your games on Xbox 720 as you would install a PC game brings up the obvious first problem: hard drive size. These are going to be 50 GB games that we will be playing and assuming the hard drive is 1 TB, that would mean you could only install 20 games of this size at a time. Meaning you will have to uninstall one game if you bought a 21st one. You'd need something on the order of 5 TBs to have a reasonable hard drive size to hold games of that size as that can hold 100 games.
The second problem is that GameStop, one of the biggest retailers of physical games period, is just not going to support a console that doesn't allow it to sell used games. It's already damning how small the PC game selection at GameStop is. One can guess that GameStop will just push the PS4 over the 720 because it behooves them to keep their used game business going. No matter our opinion of GameStop, it is the main video game retailer now and the only place where some people can find games offline.
The third problem is what is going to happen in 7 to 8 years when the 720's successor comes out. We've already seen Sony admit to abandoning backwards compatibility even in places where it would actually make since like with emulating the PS1. What's going to happen if we really do enter the smartphone and tablet future and the popular architecture is based on ARM? x86 software isn't going to play nicely on ARM, either physical or digital, and while we can obviously sell our old games from the last console, preventing used games prevents us as consumers from doing that.
Lastly, we've seen what happens for games that are primarily online with Diablo III and SimCity. We've also seen the PSN outage which made PSN unavailable for a month, and even seen how Call Of Duty 4 brought Xbox Live down due its expected popularity. Now imagine one of those events happening and you being unable to play your game or any game.
More moderate specs and lack of GDDR5 RAM means cheaper price
Even if Microsoft is including Kinect with every console, Sony will probably try to “match them” by including the PS-Eye with every PS4, at this point is clear that Microsoft will have the cheaper to produce console and that translate to cheaper to the consumer (in a competitive environment), plus since this console is always online it should be much easier to implement checks that would allow to sell this console with a phone like plan. Imagine a next Xbox selling for $199 with a 2 year Xbox live contract, who here would not be tented?
People always claim this phone-like plan for the 720, but I don't think it would work except in one particular case: The console being sold with your internet and cable plan. That's really the only way this could work, as people always forget one tiny little thing about cellphones, namely that you can use it as a phone. A phone coming with a phone plan makes perfect sense. A device like what the 720 aims to be should be bundled with plans from ISPs which means the Xbox Live fee should be bundled in with those monthly plans.
Now if Microsoft is successful with by doing that, then that's fine, but then... it's not really a console anymore and is instead a DVR that can play games. It's also not a console that I would buy... Neither would the PS4 be one, and if both did it, well, I'm already drifting towards just buying DRM-Free PC games and games on Steam and that will probably continue though with some jumping to Nintendo consoles.