For all the noise about the Wii in 2006 and about Sony now, I suspect that Microsoft is the one in trouble.
It has positioned itself where it has nowhere to go.
The Arcade price drop was coupled with a push towards the expanded market and, sure, it worked a bit - but nowhere near as much as MS wanted. There are two problems there: first, that the Xbox brand image of heavycore shooters is not in the main appealing to the family market and second, that it isn't a Wii.
Ironically, perhaps the best thing MS could do would be to rebrand and relaunch the Arcade for that market. But if they did that, the numbers would show that they were losing both battles - the heavycore to Sony and the expanded to Nintendo. And there is no good way of spinning that when you are the cheapest console.
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