It all comes back to consumer values, really. All discussions of product sales come back to that, really, because it's the central issue in trying to sell a product. To appeal to any given demographic, you have to align your product with their values sufficiently to sell it to them. Ultimately, price only establishes an upper limit to what segments of the market will look at your product. Marketing raises awareness of the product's values (or what the values are purported to be), and expands demographic awareness. But in the end, what counts most is how well the values are met by the product for the group in question.
The PlayStation 3 is a system which can best be described as "safe". In terms of consoles we've seen in the past, it pushes no envelopes and takes no risks. Everything it does was predicted as a logical next step for the industry to go in, and every last component it uses follows a mentality which aligns perfectly to the values of the group of people to whom consoles have sold to most consistently in the past. As a product which appeals to those who hold the values which have seen improvement from the Genesis/SNES to the PS1 to the PS2, the PS3 is the most logical incremental upgrade.
But in being safe, it is also being limited in who it can appeal to. Had the Wii not existed, it may well have drawn in more people who have turned to the Wii, as there would not be an alternative system that better fit their values. But since the Wii does exist, and since the PS3 is safe, that means that anybody who finds their values better fulfilled by the Wii is going to look at the PS3 as a second-rate system, regardless of what it can actually do.
This has happened in a great deal of markets before, even the video game market. 16-bit computers available in 1985 far outstripped the NES, and could do far more, but people still picked the NES. Not because it was technologically better, but because it fit their values better. The 16-bit computers were safe, too, and it did them in game-wise thanks to the NES.
As for people buying extra products for luxury purposes, that is far from common. Frugality is a trait which most people display, as being overly spending-happy can quickly lead to severe problems when the money isn't there to make those purchases. Especially now, in an economy that's in a downturn, the majority are tightening their wallets and getting the most value for their dollar. We who are willing to buy more than one video game system are a market anomaly.
Sky Render - Sanity is for the weak.
