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Seihyouken said:

This holiday season is do or die for Microsoft. If the 360 can't stay within range of PS3 sales in the upcoming months, then it will almost definitely end up in third place by the time next-generation consoles roll out.

There are three things that will drive PS3 sales for the rest of this year.
1. System selling games.
SOCOM will probably sell tens of thousands of consoles while LittleBigPlanet may very well sell a hundred thousand. Resistance 2 will also likely sell more consoles than Gears 2 due to the fact that Gears of War has already saturated the shooter market. Eternal Sonata and Cross Edge will likely sell consoles in Japan comparable to Tales of Vesperia and Infinite Undiscovery as well.
2. New SKUs
New SKUs always spike console sales and PS3 has two coming out this year. The new 80GB will likely see a nice amount of sales (particularly in Europe) and should level out PS3 sales to what they were back in Q1 of this year. The upcoming 160GB model will have a similar effect as the MGS4 and MotorStorm bundles and will likely sell out immediately. Its release right between LittleBigPlanet and Resistance 2 will ensure that 360 doesn't beat PS3 sales in early November at the least.
3. Blu-ray
This Christmas will be the biggest blu-ray/HD television season ever. PS3 is one of the cheapest blu-ray players on the market and it's probably THE most future-proof of them all. You can expect that with the mad rush to finally adopt an High Def format by a large portion of the general population, the PS3 will be on quite a few Christmas lists.

I really don't think that 360 can compete with Sony on these three points with its price-cuts. I personally think that the majority of the demographic of people in past generations that hold off on spending over 200 dollars on a system largely overlap the Wii's demographic and I feel that this will cause problems for Microsoft.

1. The 360 does have some system selling games coming down the pipeline. Fable 2 and Gears 2 will be blockbusters. Also, to say that Socom will be a blockbuster and that Resistance will sell more than Gears due to market saturation of shooters is stupifying.

2. The 360 also has a new 60 gb SKU releasing. Also, I would not be surprised if the cheap price of Banjo-Kazooe and the cheap Arcade SKU are bundled into an attractive package for children. If Wiis are in short supply, and I suspect they will be, a 360 bundled with Banjo-Kazooe selling for approximately $230 would be appealing to most parents. That last part is a hypothetical, but I would not be surprised to see it. 

3. I agree that Blu-Ray is a positive point for Sony, but I imagine almost every person who will purchase a Blu-Ray player without the intent of gaming will not purchase a PS3. I do not have numbers to bolster my assertion, but I have never met a person who bought a console solely as a DVD player. I highly doubt the general population will purchase a PS3 simply as a Bu-Ray player.