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"As sony/microsoft are able to make improvements in its games, its online content, manufacturing and other price reductions"
Thats the depressing thing about consoles for the past 10 years. Always waiting for the next improvement. PS2 games are selling better than PS3 games, currently. But PS2 games don't look as good as PS3 games, so how could that be? How can anyone enjoy graphics that we were supposed to enjoy last year?
Doesn't anyone remember how "cool" the original XBOX was? How "awesome" HALO's graphics were? Well now the Wii is more powerful than the XBOX and PS2, with additional controller functionality, and only $250, yet somehow the games can't possibly be fun. Because the graphics are from last year. That didn't make any sense to Nintendo.
And now, they're basically hiring guys with tractors and dumptrucks to help them organize their huge piles of cash. And every time sony sells a PS3, they are still in debt from the manufacturing and marketing of it.