This is the way I understand it, someone at Sony foolishly boasted that their goal with the Playstation was to replace the PC. Microsoft took that as a direct threat to their business so they responded with the Xbox.

MS plays the hardest of hardball,  I expect them to do everything in their power to bury Sony and piss on the grave. So, the answer to the question is yes.

 There's a difference, PSP has a tiny screen the PS3 only works on large screens wgere people actually watch movies on. UMD is a failure on the movie front but good on the game medium front. Blu-ray is outpacing HD-DVD making it so that they have a good chance of winning and DVD sales are slowing, more and more people are trying to buy their movies in the HD formats as this happens DVD sales will decline, it only makes sense if 1000 customers cut buying regular DVDs by 75% a year thats 75% less DVDs sold to 1000 people. Now lets say those 1000 people by 100 DVDs a year thats 10000 movies now 75% of that or 7500 are now Blu-ray and HD-DVD sales. That does cut down DVD's market share. Especially when it comes to the fact that more and more people are getting HD format players and using the PS3's ability to play Blu-ray movies. 

You need hundreds and hundreds of millions of units sold in a majority of homes around the world to make dent in the dvd market. I think they said transformers sold 8 million dvds in its first week while the largest hd dvd debut ever was arguably 190k. Spiderman had similar results. Its still a very very microscopic niche in the movie format war. If you go to best buy, you will see 5-6 entire ailes dedicated to dvd and blue ray and hd dvd share one half side of one split in hal  for both formats.

DVD sales are slowing? When did this start happening?

hd dvd and blue ray combined doesnt amount to a bug bite in the big scheme of things. Anyone think even Sony was stupid enough to only release Spiderman in blue ray format exclusively? They dont even trust their format that much. And the fact that each side has studio exclusivity only stall mates things longer

 Home Media Magazine had a report on it like 6 years ago. 

 a ding can grow quite large and ugly if given enough time. 

What are you talking about? Spiderman3 was released on both DVD and bluray just like anyother movie ever made for HD, what other formats would Sony put Spiderman3 on?

also, can you atleast have the decency to spell "blu-ray" correctly?

eugene said:"Maybe Microsoft will do a $100 price cut one day before Metal Gear Solid 4 launches. "

Are they going to cut another hundred when GT5 comes out? hows about FF13? Or everyother high profile PS3 game to be released.?

eugene said: "But the difference is that Microsoft can afford to jump into the hole but Sony cant. Thats why I think Microsoft is just playing witht them. They financially can do a "death blow". But yes, its much smarter to make money. But Sony is in Microsofts palm."

Jesus. Is Sony going to go bankrupt or something? Microsoft can't deal a "deathblow" to sony, as a matter of fact, none of the console makers can take anyone out of the fold for this current generation. Sony isn't sega or atari and they have their many ways of getting more money to plug into a product, but their main goal is to turn a profit (just like every other corp/companies' goal). As for the whole "Microsoft is playing with Sony" and "Sony is in Microsofts palm" remarks. That is just plain asinine. Microsoft is putting alot of effort into marketing their games, especially the multiplatform ones. The gap between the PS3 and it's competition is 7~8 million, given the fact that all this generation is still very early in the life cycle, it's way to early to state something like "microsoft is purposely bleeding Sony out". Saying that the PS3 is on the verge of death by microsoft this early is pretty ignorant, and implying that MS can prevent Sony from making a PS4 is stupid. Not to mention that you're completely dismissing the Nintendo.

God No! Not another PS3 is Dead topic. PS3 will win this war, so enjoy your victory while you have it :P Seriously don't we already have 100 of these topics? Move on and let life play it out. Everyone is only speculating. No-one knows how it would pan out. The 360 could win :( Doubt it :P

You know, some of you are heavily overrestimating M$. Although Micro$oft have traditionally been driving their competition out of business, but these are small companies and M$ have used their big pockets against competition, it's been like them being a teenager bullying in kindergarten. Now, when they entered the mobile phone business, or the gaming business, they stepped out from the kindergarten, to the big boys league, thinking they could gain something by bullying like before. And what happens? They get beaten. Outside operating systems, they compete with companies, who have as big pockets as Micro$oft has and those companies tend to have decades with experience from the business they're in, when M$ only jumps out of the woods with pockets full of money.
So, if we look at Sony and Micro$oft, it's more propable, that Sony drives M$ out of business, than vice versa.
If we look at what business' M$ has, it has operating systems (as in terms of being dominant, like it has been discussed in this topic) and office should be counted at a part of it's OS business. And WTF is Zune? I don't think M$ dominates that market, unless "Zune" is a market of it's own.

Worst thing that can happen to PS3, isn't M$ making money with 360, but 3rd parties making money with 360, maybe after 3rd parties losing money with PS3. I don't think Sony is currently in a situation with PS3, that it worries how competition is doing, what they need to worry is how to turn PS3 in to money. And what comes with Nintendo, i don't think M$ and Sony think that they can do anything to stop Wii or DS, so they can compete only with each other.

@Dodece: Maybe Time Warner has control over your living room, but that's because you have chosen it to be so. And Time Warner had to compete to get to your living room. It doesn't have a monopoly on entertainment. Let's look at my living room: i have Elisa cable TV, Elisa internet connection, Elisa mobile phone connection and the entertainment that runs on my TV, is mostly from Nintendo. Why is it so? It's because i have chosen to. I can switch to Digitas terrestial network for TV broadcasts (which i will, after cable goes digital after few months), i can change my ISP anytime i want to, just like my phone operator and i can buy games/consoles, other than Nintendo, anytime i want. But the reason why i have chosen to do as i have, is because those companies have competed to have a product that fits for me.

@eab: The reason why GE is playing the nice guy, is that they know playing the hardball doesn't get you anywhere, anyway they know they play in the big boys league, where the other big boys can hit back. Which leads only to losing money. The reason why Sony fucks with gamers, is that (just like M$) they saw themselves being the big guy among kids (not to mention their rootkit).

@ssj: If DVD sales have been slowing 6 years ago, that propably has more to do with crappy movies than future HD formats. I could claim as well, that the reason why Blu-Ray and HD-DVD doesn't sell, is HVD.
From 65nm process, compared to 90, you gain only in long term with high production numbers. The change itself, is expensive as hell.

@Ickalanda: That was pretty much like crap you wrote there. You propably know it yourself too.
Tell me, where can i get a PC with 270 Euros to play with my widesceen TV and i don't need to upgrade it as long as it gets games? Problem with your claim with HC games, was that consoles doesn't have games, that would turn the "PC HC gamers" to consoles. No MMO:s. Then there's the kids, who play FPS's online, which you hardly can call "gamers", or you can, but same way you can call the MMO gamers or Nintendogs gamers. When we really start to talk about gamers, they have a lot bigger variety in games they play. By definition how "Hardcore Gamers" define themselves, would "Hardcore" (without gamer) be better defininion, since the "Hardcore Games" (defined by themselves), play like the traditional non-gamers, with the difference that the "HC" group plays more.
I would call PC controls being far inferior to consoles.