Well I think the fact that the cheaper console had to cut it prices in order to remain competitive is telling. I don't think I would call the 360 a dreamcast, but even with price drops it seems like it can't replace the PS3 as the PS2 successor.
What I think is happening is that we are seeing separation between how people view the 360. Originally they wanted to be the sequel, and it was working for awhile. But now the PS3 has created separation with its future software lineup and, oddly enough, its price.
The 360 can't shake the image of being "that old console that plays Halo." To many its not as fresh as the PS3, and global price drops just reaffirm that. People aren't dying to get their hands on an HD console right now because they can play a Wii. To get consumers to be interested the 360 needs new software not lower price. I really can't wait to start seeing new LBP commercials. I think the buzz surrounding the PS3 this fall will be huge and the 360 will be in trouble still even with price drops.
Will the 360 be dead? Maybe not anymore. It will actually sell better this year than last. Even still, the PS3 is selling so well ATM that the 360 can't keep up. Now if the PS3 reaches $350 or better yet $299 in the next few months THEN we will see the 360 being in serious trouble.
