Yes and no, it really depends on the market segments that are buying the console.
1. People who would have never bought a machine - Not competing with PS360
2. People who want a cheap basic system for their kids - Competing with Xbox360 arcade
3. Hardcore gamers - Competing with PS360
4. Casual gamers - Competing with PS360
Segment 1 which is a significant part of the market for Wiis is not competing with PS360. These people play Wii sports and Wii play and buy Wii fit, its the non gamers, gamers system. Possibly as high as 50% of the Wiis have been sold to this group, however the household may include people from the other groups who will also use the system. Like kids. So its not cut n dried.
I would say about half of the Wiis total sales are up for grabs from the other 2 consoles if they make an offering they want at a price they can afford.
But lastly, its impossible to know how much they're competing. The Wii has always been out of stock and underselling itself. So it is impossible to measure how a price cut on another system causes any substitution effect - the real measure of competion.
Tease.
