Why do people think the 360 is vulnerable in sales?

[MikeB]

Various reasons to doubt the long haul sales potential of the 360.

Three most important ones:

1) The 360 will pass the original XBox' install base (premature demise) this year. This in combination with the fact that only Fable 2 remains as a big XBox sequel coming to the 360, the rest are all already released.
2) The 360 sold significantly slower than the PS3 taking equal time frames, despite much lower entry pricing, having months to years of an additional head start in various regions.
3) Microsoft has a very bad reputation in general in most regions (maybe a little less in the UK and US). The 360 is considered to be unreliable faulty by many (RRoD and disc scratching). Microsoft's HD DVD support and sudden demise is viewed by some as a Microsoft defeat.

4) The PS3 is starting to demonstrate the worth of its technical abilities vs the 360, developers have truly started to take advantage of Blu-Ray disc and the Cell processor. 360 and multi-platform devs are starting drawn into making more and more technical sacrifices (no default harddrive, 6.8 GB DVD discs, the CPU/GPU are as good as maxed out with the upcoming games).
5) Playstation Home add features to the online gaming experience the 360 will not have and this for free. There are a lot of hidden costs to have a basic experience for many people.
6) HDMI 1.3 capable HDTVs and 7.1 audio setups are becoming more and more common.
7) For additional promoted services like video downloads (or recordings on the PS3) harddrive storage requirements are growing, while the PS3 is easily and cheaply upgraded, the 360 depends on a small selection of more costly and less capable custom options.
8) Blu-Ray movie sales have multiplied considerably this year compared to last year. The same is expected for next year with Christmas adding a lot of PS3s in people's homes this year. It's becoming more an more an all-in-one selling feature for the PS3 as HDTV penetration increases.
9) PlayTV, movie downloads and maybe even PS3 gaming on the go using a PSP, being able to schedule the PS3 with the PSP. The 360 is missing such connectivity and functionality.
10) The console isn't very kids friendly due to its reliability issues, it's not friendly towards audio/visual movie lovers, bad quality DVD playback / noisy hardware / no support for Blu-Ray movies / etc. The console mainly appeals to 3D world shooter fans, that's not to say the console only has 3D shooters, but the former is true. And exclusive high quality PS3 3D world shooters like Resistance 2 and Killzone 2 may well pull some of this potential user base towards the PS3 (a sort of gaming gerne the PS2 was relatively weak at, unlike the PS3).

Having said that I don't believe the 360 will have a bad sales year for 2008, but I expect the effects to show more and more in 2009.