On the last point (highlighted in red above) I would have to say that this is true to an extent.
It's important to understand that consoles sales, despite competing for the same gaming dollar, is not a zero sum game. For those not sure what that means, a zero sum game is any situation in which the gains of a person/thing must exactly correspond to the losses of one or more 'opponents'. In effect it's saying that there is a fixed amount to be won or lost and that anyone's gain is someone else's loss.
The console market is not zero sum because the loss in this case happens at the consumer level but the consumer is not a player in console sales "game", only other companies are. So when Sony sells 100k units it doesn't mean that there are 100k less sales available for Nintendo and MS, but it does mean there is less money out there to be spent on their systems. The difference being that the pool of available money becomes extremely stingy before being exhausted rather than ever running out, where as in a zero sum game this diminishing sales effect would not exist and a 1:1 ratio would.
The point I'm driving at here is that while yes there is going to be a fight over sales between the two HD consoles there is also a fight between each HD console and the Wii as well. The difference is that every HD sale will likely have more of an impact on the other HD console's ability to sell another unit than it will the Wii's ability to sell another unit for the obvious reasons. The converse is also true where the Wii selling one unit will have less of an effect on the HD consoles than they do to each other.
This is probably a bit confusing given how tired I am atm, but the key to remember is that there is a finite, albeit unknown, cap on the amount of cash that can be spent on any given day, week, month, or year. And every sale within that period serves to further exhausts the overall pool and effects the ability of other competitors to make their own sales. But it's not a 1:1 ratio of gain to loss either, so we won't exactly be seeing a bloody pit fight unless two of the competitors decide they really want to go at it ...in which case the third competitor will very likely be the benefactor of their fight.
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