Sony is not dead yet. They have until the end of this year to boost sales, and get some momentum going. If they end a distant third by the end of this year, then they will really struggle (or effectively be dead in the water).
You talk about generations - Sony is pushing the PS3 as the "next" generation - i.e. beyond both the 360 & Wii. I think they will have some success (based on what I have seen from their gamers day) - but they will need more than this:
- Nintendo *will* win the casual gamers (biggest market)
- MS *will* win PC/hardcore/online gamers (profitable/hard-core gaming market)
Sony has a chance of winning the "cool" gamers - kids (mainly boys) in the age bracket 10-25. The problem is this age bracket is one of the most price sensitive, and the PS3 is just too expensive.... for now.
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Another factor missing from your analysis is this: why did those other consoles "fail" (i.e. drop out) of the contest for that generation? Money? Dropping out of test market?
Sony has the money, and Sony *will* have the games (plenty of internally developed games at the least). Unless MS completely outplays them (better games), Sony will have success - and this will build. It may take a couple of years before sales significantly boost for the PS3 though.
As always, it comes down to the quality/innovation of the games. If MS can out-develop Sony - then the PS3 may well be doomed. But its definitely not over yet.
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