First off for those who say that the PS3 is behind the 360 in any way among 3rd parties you need to take a look at the financials of EA (you can find them on a lot of gamer sites) where the PS3 revenue is AHEAD of the 360 revenue. Why? Because the PS3 is headed towards dominance in the world outside America (which is more profitable due to currency valuations, a Euro is almost 2:1 with a dollar). The PS3 being the international choice will continue to matter more and more. Dropping 360 support would be more feasible for the major players like EA, Ubisoft and the like then dropping PS3 support.
For those who talk about how MS will get a head start and Sony will be doomed, the next generation is going to be among the least revolutionary in video game history if it starts in the next few years. Think about it, how much of an improvement in graphics is possible with todays hardware (or even hardware slated to come out in the next few years)? If MS maxes out a 500 dollar box 2 or 3 years from now how much more powerful then the PS3 will it be? My guess is it will be about the same difference as the PS2 to the Xbox. The Xbox will be more powerful, but it won't be worth buying a new system for since the PS3 will be cheaper with a better library. Look at games like Metal Gear Solid 4, slightly better graphics will certainly not be a strong selling point when that is possible already. It's going to take at least 8 years for tech to make a new console so compelling its a must buy.
When people look at pioneer systems doing decently even with entrenched players its almost always a LARGE increase in capacity that does it. Look at the Genesis vs the NES for instance, or the Dreamcast vs the PS1/N64, or the 360 vs the PS2/Gamecube. The only reason the pioneer systems did well in their first year is they were vastly superior to what was out, which made the risk worth taking. Remember those Genesis does what Nintendo don't commercials? That only worked because it was really true, Sonic graphics blew away Super Mario Bros graphics until the SNES. What would the next Xbox commercial say? Xbox does what Sony does, but you can put the settings up from high to very high!
Yes SOME people will pay hundreds of dollars to move the settings from high to very high or get that 2xAA to 4xAA; unfortunately those people are already PC gamers and probably not into console ports of games they already have.
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