The hardware market for gaming is akin to an oligopoly/monopolistic competition model with product differentiation, as none of the companies sell the same product. However the issue is that Sony and MS are not as differentiated as Nintendo, both in hardware and in software, so for them price is very important. The key is that while they are not perfect subsitutes, the 360 and PS3 are mostly interchangeble, especially as Sony loses exclusives to the 360, inaddition the dropping prices in standalone blu-ray players takes away that issue, so for Sony their problem is that for a lower price the 360 can deliver a very similar experience, as long as 360 can keep the price edge, and blu-ray players continue to fall in price, the PS3 will have a very hard time catching up to the 360 in sales
Predictions:Sales of Wii Fit will surpass the combined sales of the Grand Theft Auto franchiseLifetime sales of Wii will surpass the combined sales of the entire Playstation family of consoles by 12/31/2015 Wii hardware sales will surpass the total hardware sales of the PS2 by 12/31/2010 Wii will have 50% marketshare or more by the end of 2008 (I was wrong!! It was a little over 48% only)Wii will surpass 45 Million in lifetime sales by the end of 2008 (I was wrong!! Nintendo Financials showed it fell slightly short of 45 million shipped by end of 2008)Wii will surpass 80 Million in lifetime sales by the end of 2009 (I was wrong!! Wii didn't even get to 70 Million)
