You can't be much more of a long term failure 6.5 years into your plan, than the Xbox brand is. They were both great game machines, but horrible business failures. I have said that their is a strong possibility of them pulling out of this trouble, however, if they don't by the end of '08 why would they continue?

MS would have failed to penetrate the market losing billions of dollars in two generations. They have never had a positive sales year. What would be the point of MS gain market share if that market share doesn't yield a profit?

@goddbless: I said a decline since the holidays, not a drop after the holidays. Meaning that sales have gone down each month, and almost every week.

I am not "against" Xbox. I am not "against" Sony. They are both failures this gen so far. We a almost a year in, the holidays are coming. I hope I am wrong. I like the competition. If both brands make it through, and they try to have a regular 5 year life cycle, than it is confirmed that one company will try to have another "money fight". This would be really bad for gaming and would probably put both of them out of (gaming) business. Let's hope for an extended life cycle.

(edit: what I would like to see is my Sig being waaaay off.  I hope Nintendo can get production up and sell 18 million, I hope PS3's new games raise interest and sells 8-9 million, I hope 360 can hit 15-18 million with the strength of the Halo brand and all those other awesome games.)

A End of Xbox? No.

A Start for Sony? Yes.

Even that I would say is premature. You cannot predict a pattern based on a single data point. This could be the start of a trend or a blip. We need at least 3 weeks, preferably more, before we can really say that Sony's gotten a new start.

 Misterd,

               I'm not saying Sony is going gangbusters with sales now. Nor am I saying they will only go up from here, even at a slow pace.

Regardless if this proves to be just a blip, it's a start. A start isn't a trend. 

Again, because you are thinking too short term. Their plan was never about 1 generation or even 2. When the XBox launched they were looking 2 decades down the road.

Again, the long term goal was to become, eventually, the home entertainment console. The collapse of WebTV left that territory uncontested, but Sony was clearly making a move for it. The goal of the Xbox was to stop Sony and grab as large a share of that pie for itself as possible.

I don't know what the specifics of MS's strategy are, but I imagine the basic steps would be:

1) Establish MS as a legitimate player in the gaming market. In this MS has succeeded. As of yet, no one believes MS will be out of gaming come the next generation.

2) Increase market share. Even MS had to realize that it would be difficult to outcompete two gaming giants in one generation. The XBox got their foot in the door, now its up to the 360 to actually get into house by taking some of Sony's market away. That will be essential for the next step:

3) Integration of home entertainment. Already starting to some degree, but not quite here yet. I doubt if it will be successfully realized even in the next generation, but I do expect the "720" to be  a big step closer.

4) Become a dominant player in living room with unified home entertainment system.

At best, this will take 4 generations (starting with the XBox). If you take a console generation to be 5 years, your looking at a roughly 20 year plan.

This is a pointless debate, but that's what the internet is for, right?

I'd say if it doesn't actually result in a trend, then it would be better described as a "false start." Lord knows getting your car started doesn't mean much if you can't get it to go anywhere.

Its the end of the 360 as we know it.
Its the end of the 360 as we know it.
and we feel fine!

I would call this kind of speculation a LITTLE BIT PREMATURE. You can't really speculate that it's the end for MS because Sony had a good week- just ONE! If that's how it works, it should be the end of Sony and MS because the wii has outsold both of them for 8 months straight! It's not the end for anybody yet, to early in the gen to say that kind of thing. This is just a temporary sales bump due to hype over a so-called 'price cut'.

 Thank you for your always valued input and objective analysis.