Sony and Nintendo really haven't made any serious blunders this console generation. Nintendo built an affordable console around motion control, which doesn't need HDTV to shine, so lack of HDTV isn't a blunder. The high price of the PS3 isn't a mistake, either, it was a very good biz decision - you don't want to prematurely kill off the PS2, and the high price point meant high build quality and a design which will last 10 years. Sony delivered on its integrated media strategy, and Nintendo delivered on its blue ocean strategy.
Microsoft, on the other hand, really needs new management, because they made several mistakes. I think the single worst decision they ever made was to prematurely kill off the Xbox. Microsoft now has nothing to sell to 2.5 billion increasingly wealthy Chinese, Indians, Brazilians and Russians just entering the gaming market. A close second: not building in next-gen DVD capacity into the 360, and generally scrimping on the 360's media playback capabilities.
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