The generation before this one (PS2, XB, GCN) was basically PS2 and the "other" systems. Well, its changed. I think the PS2 owners are migrating to different systems. Xbox 360 has more content than Xbox. The first Xbox was an American console, with shooters and racers mostly. American gamers like American games, so the PS2 owners here aren't afraid to check the Xbox brand anymore. With Resident Evil, Final Fantasy, and GTA now franchises in Xbox, its obvious that a $199-$299 Xbox 360 will be picked up over a $399-$499 PS3.
BUT... Many of my friends were PS2 junkies, they picked up the Xbox 360, but now that PS3 might drop its price to $299 by the end of the year, they are thinking of picking it up. Sony screwed up cuz of price and now its losing user base, but it hasn't totally lost them. The casual gamers of PS2 are going to Wii, especially cuz casual gamers are more likely to see $399-$499 for a game console as ridiculous.
The PlayStation brand name is stronger than you think. Only Sony can launch a $499-$599 system and still be in the race. Only Sony can sell a $499-$599 system in its first year and in two years sell 20 million units. Its like Apple and Nike. Its a brand name that is sure to keep fans and be seen as the defacto standard.
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