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Reasonable said:
I don't think you're being realistic - at least in choice of words.

PS3 spent fist half or more of year catching up on 360.

360 grew too but not enough to be exciting and was essentially being outsold WW despite having same games plus more exclusives and lower price

MS responded in the only way they could and dropped price (as until then I'd argue Sony was hurting MS more than the other way around)

360 has pulled some ground back but I think YTD PS3 has still improved more than 360 - and until we get to January/February we won't know how 2008 in full played out.

So I don't agree 360 made PS3 flop yet although MS have made the right moves to fight back.

I don't think the PS3 has "flopped" however I'm sure it is not performing to Sony's expectations.  The PS2 was far and away the market leader last generation and there is simply no way the PS3 will obtain that large a percentage of the market this generation.

That being said, the ONLY thing this does for PS3 owners is limit the number of 3rd party exclusives that will appear first, or only on the PS3.  Without the huge marketshare lead, and given the performance on software on the 360, there is no real incentive to stay exclusive to the PS3.  Besides, the market is clearly big enough to support two HD consoles as evidenced by the increasing sales of the 360 and PS3, even with a gloomy global economy.

Would be a shame, in my book however, if the higher priced consoles with less exclusives "won" the sales battle simply due to Brand name or tertiary (to games) abilities (Blu-Ray).