What is the difference between the Xbox 360 Arcade and Xbox 360?

The arcade has no harddrive. According to Xbox.com it doesn't come with a headset, a network cable, HD video cables(composite or HDMI), or backwards compatibility. I think you need a hardrive for backwards compatability, so you just need to buy one. It does come with a 256 mb memorycard to compensate for its lack of a harddrive. It still comes with silver membership to Xboxlive, and you can still play all 360 games, but you can't buy games on xboxlive again because of the lack of a harddrive. I would suggest just going ahead and buying the Xbox 360. The acrade version somes with no accessories and no hardrive, which means you're going to have to buy all that stuff anyways.