They had a reason to fight for marketshare in the past, the whole point of the razors and blades model is to gain enough marketshare to a) be relevant enough to achieve substantial developer support and b) to get such a lead that developers flock to their system. a) is already achieved and neither are not going to lose it by being less aggressive now, b) is no longer reasonably possible by competing mainly with each other.
They would both still have exclusives, mostly first party ones.
People have to remember that marketshare is not an end in itself. It is a means to the end that is profit. At this point though, fighting for market-share amongst eachother is working against the goal of profit. Competing less aggressively achieves the end goal better than competing aggressively.
As for competing with Wii, Nintendo more likely cut because it's sales were in decline, not because of anything to do with the PS3. Either way, it hasn't helped them achieve more profit, has it? Nintendo's lower weekly marketshare has much more to do with their own decline due to their own software drought than anything that's happened with the HD consoles. Nor do they need to compete over third party support with the Wii, it's clear the Wii isn't getting the same support anyway. Only one major game in the whole generation has jumped from PS3 to Wii.
A game I'm developing with some friends:
www.xnagg.com/zombieasteroids/publish.htm
It is largely a technical exercise but feedback is appreciated.
