MS spending money to fix the problem doesn't change the fact that many people were buying multiple 360's due to the RROD issue.
My point is with healthy competition, the userbase divides, Sony went from 150m customers to 80m, Xbox went from 30m customers to 80m and Nintendo went from 20m customers to 100m customers. This gen the competition wasn't healthy until the S and Switch released however that was midway through the generation.
You still don't see the forest for the trees. Roughly 30 million of the sales loss from PS2 to PS3 had nothing to do with competition. It had to do with Blu-Ray not being as revolutionary as DVD, with many countries not getting an affordable PS2 price until 2004-2007, and with the following gen being disappointing early on (which led to people still buying and sticking with the PS2 until 2008). https://www.theregister.co.uk/2009/01/05/ps2_most_played_2008_nielson_yearly_roundup/
10-20 million of the 360's sales had nothing to do with competition either. It had to do with RROD.
And again with Wii. Nintendo didn't reach that 100 million number by stealing (A.K.A. Competition) gamers from Sony, or MS. They made it by getting Grandmas and Soccer Moms temporarily into gaming. As well as getting many people to buy Wii as a cheap 2nd system.
If we take the historical context into account, the difference that competition made would be Xbox 360 gaining 40 million users, PS3 losing 30 million users, and Nintendo gaining 30 million users over GameCube.
You remind me of rural Texans thinking they can secede from the union with just a citizen's militia. They'll say that the 13 colonies rebelled against the British Superpower and won, with just a simple militia, therefore Texas can rebel against the USA and win.
Switch is definitely healthy competition, but the S? XB1 weekly sales numbers are still half to a quarter of PS4 weekly sales numbers. That's not healthy competition. Also remember that Switch has massive crossover appeal. Nintendo is rarely stealing sales from PS4 or XB1, but rather getting people to buy a Switch as a 2nd system.
Anyway, my point here is that yes competition can even out sales, but it is not the be-all end-all of sales. There are other factors that come into play, and those need to be accounted for in order to see the bigger picture.
P.S. I agree that 360 did indeed do more software sales. But it's console royalty fees that ultimately make more money for a console, not individual software sales. MS didn't have better profit margins than Sony because they were making a boatload of money directly from sales of Halo 3's, and GoW's. They had a better profit margin because every 3rd party dev had to pay a $10-$15 console royalty fee per game sold. And having games like Halo, GoW, Fable, Viva Pinata, Crackdown, etc indirectly helped them with that goal, by moving more console units, which lead to more 3rd party sales, hence more $10-$15 royalty fees racked up.
I am referring to the Xbox brand and the decision making and next gen planning.
Like I said, hazy, non-objective, marketing terms.
Come now Cerebral, if you are going to make claims of RROD increasing 360 sales, can you prove it rather than just randonly make up numbers?
RROD was covered by warranty, so any one buying a new console while still under warranty sounds alittle unbelievable.
Also dont act like the PS3 had a clean bill of health, they also had there fair share of issues like the Yellow Light problems and the firmware update that bricked systems.
Those PS2 owners went on to buy a Wii or 360 at launch, not all of them waited for PS3, another speculation of yours. I knew many gamers who jumped from PS2 to 360 just like i know many gamers who jumped from 360 to PS4. Whoever holds the markering strenghts wins the audience.
Also you forgot to add that the 360 was also making billions off Live Subs which the PS3 didnt have including the fact it sold more software and accessories etc.