^Last time I checked Microsoft was more in the hole than Sony, and to offset PS3 losses Sony has 2 other profitable gaming consoles out that are selling well. Sony has brand exclusives that Microsoft can never buy, while as you stated, Microsoft has to buy their exclusives, I don't think you're looking at the entire picture and I laugh at you for saying "Microsoft smells blood in the water." for if it is anyones blood it is Microsoft smelling their own blood.
Your logic in "Microsoft will use their longer production run to continually push down prices" is flawed, for the technology in the PS3 is so much more advance than the 360, as we all know technology prices drop radically every year, but what you fail to realize is that the technology in the 360 is so simple it can only get so much cheaper than it already is, while in the PS3, there is vast opportunity for reducing cost.
You also forget that Sony has been in this a lot longer than Microsoft, and they know where their money should be going, while Microsoft is throwing away 50 million for some extra content on a single game. I think it's safe to say Sony has atleast a few more tricks up their sleeve while MS has fired their big guns and were unsuccessful in stopping Sony.
You go on my 360 fanboy list.
