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fazz said:
Yes, they are competing directly, no matter the functionality, power or target audience.


If it was like you said, the PS2 didn't compete with the GC and Xbox, because they had quite a difference in power, target audience and functionality. Or the 360 and PS3 are not competing because Sony targets the Sony fans, and MS targets... well, like everyone.
The PS2/XBOX/GC where all direct competitors , this is evident in the way that the PS2 hindered the XBOX's/GC's sales performance And as for your bolded point  , LOL. /thread you win.