Off - topic - Why do Sony fans think PS3's 'superior' graphics will hurt X360? Or even Wii? Did you abandon your PS2's when the Xbox came out with much superior graphics? No. Then don't expect anyone else will.
On Topic - I see it this way. Wii will become a household device. It will be everywhere. Nintendo will never fully meet market demand ww and won't even want to think about adding another console when they can't meet demand with their first yet. They will not be first.
I think MS & Sony will pretty much split the gamer market, although Wii will have both gamers and 'non-gamers', 90% of gamers will end up with 2 systems, Wii +. This will result in both X360 and PS3 being successes in their own right and both will become profitable. As they have both taken huge losses, and graphic capabilities won't be a big factor for the next gen, I think they'll be content to go beyond 5 years to make some money.
I think a new competitor will come in with >PS3 like graphics, Wii like easy controls, a mass market price, lots of cash, and target the expanded Wii audience. As Nintendo fails to fully meet demand, and PS3/360 aren't really catering to the 'expanded market' (let's face it, how many 'girl' or 'brain-age' like games are on Xbox or PS3? Vertually none) this will let the new competitor pick up the overflow of Wii demand and at the same time graphic whores. They will also be seen as 'the next big thing' and quickly start eating up marketshare.
Sony & MS will have no choice but to respond, and eventually Nintendo too.
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