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Ultimately it's a business. If there's no money in being second then it's simply not worth it. Although both companies have secondary agenda's - Sony to push Blu-ray and MS to keep Sony from owning the world's livingrooms.

So far in this gen coming second has come at the expense of billions of dollars. MS is at least starting to recoop initial loses, but Sony is still just losing money. If either of them will come out ahead by the time this generation is finished is still open for debate.

On the flipside Nintendo was very profitable in 3rd last gen.