thx, and I believe that's what MS will do.

Microsoft has the advantage, and it's a huge one. Thats why they are quiet. The Playstation 3 has had to drop it's price $200 dollars to remain remotely competitive. The Xbox 360 has had to drop it's price less than $50 to remain competitive. See the difference?

What happens next year if Microsoft decides to really become a force, and drop the price to levels like thx1138 has stated? MS could easily do $219 for the arcade now if they wanted to. When that happens, what can Sony do? Drop the price yet again, and have a console that will never, ever be profitable? It's not like the PS3 costs $400 to make....It's a bit more than that. Whereas the X360 is most likely under $250 for the Premium models.

@mrstickball

yep that's going to be huge for MS if prices drop to those levels. I wonder if dropping console prices like those would still yield revenue for MS.

But I think Sony is set for price drops for next year too considering the recent announcements of 45nm Cells and 65nm RSX chips. This could level their profit over their loses for the current versions of their SKUs

On the other hand, Sony's game division is going to need to yield profit fast or they are going to be low on resources to buy exclusives in the future considering MS's system is a bright red apple for developers eyes considering its track record on software sales.

I still don't understand how the PS3 can outsell the 360. Even with the price cut the 40gb still cost more than the standard 360 and with Halo 3, Mass Effect, Bioshock and some 3rd party titles that are "better" than the PS3 versions. The 360 should easily outsell the PS3 but it doesn't.

It's sad when MS releases it's biggest first party titles this holiday season with cheaper SKU bundles and can't outsell what some may call Sony's inferior model to the 60gb (40gb with no BC, 2 USB slots and so on) with "no games".

@Harvey Birdman

I don't think you can call the PS3 with no games as it stands right now.

And price cut for PS3 should be a good reason don't you think? I mean the 40gb has a blu ray player whereas the Premium doesn't. So they're pretty much equal if you ask me.

As much as I don't like to use a sex analogy: They shot their load this holiday season now they've passed out.

They're going to be riding the momentum of an incredible span of games. Keep in mind that's probably as good as it's going to get for a string of high end releases, a game glut like the one we just doesn't come along except maybe once every 10 years.

I really wonder what's going to happen to the 360 over the next year and a half. The PS3 has a lot of great stuff coming out throughout 2008.

A lot of the top games coming out for the 360 are not exlusive. GTA4 coming out also for the PS3 and if it comes out at around the same time as MGS we may see a spike like the 360 had a month ago.

Left 4 Dead is also a PC game, definitely not a system seller, at best it will do as well as the Orange Box. The bulk of L4D's sales will be PC.

What concerns me about future 360 sales are a few things:
1) They're competing not only with the PS3, but the PC for game sales. Both platforms will chip away significant portions of the 360's profit. The Orange Box and Call of Duty 4 probably got more people to upgrade their computers than buy a 360.

When you make your main hook FPS games, there's a fatal flaw. The PC version will always be far superior, as will be the case for Left 4 Dead and was the case for the Orange Box, Gears of War, CoD 4, and in a year Mass Effect. Better controls, more customization, free online, and Steam gives you the added bonus of owning a game forever once you bought it.

In essence this makes the 360 jack of all trades and master of none. Whether this is good or bad remains to be seen. The key difference this generation is the PC: DirectX 10 is the biggest tech leap since going 3D, and the price for hardware is becoming much more affordable. How current 360 and PS3 owners feel about the Wii not having the graphics and grand scale is a criticism that will be aimed directly at consoles in the near future.

Any way you slice it, PC and PS3 will be drawing from the 360 pool.

2) PS3 is only in competition with the 360. I'm personally not a fan of the PS3, but so far they've been the best at distinguishing themselves from the PC.

What distinguishes them from the 360? Stability #1. I love my 360 but it's also in the shop for the 3rd time. I'm at the point where I'm starting to actually get pissed at a console for the first time. I'm not the only one. If it bricks again I'm just going to sell it and upgrade my PC some more, I'm sure others will just trade in theirs for a PS3 if they've dealt with the same problems I have.

The second thing that distinguishes them from the 360 is games. Not so much game quality and quantity at this point, but game type. R&C, Motorstorm, Virtua Fighter, MGS4, GTA4, JRPGs--these types of games just don't translate over to superior PC versions like FPS do.

I guess all in all I don't think the 360 is as set in stone for 2nd place as some like to think it is. Their advantage is used up at this point and the PS3 still haven't shot its alpha strike for exclusives, so every time they do will just hurt the 360 more and more. Halo 3 was the major system mover this generation and it was helped along by a lot of great games coming out at roughly the same time.

Obviously I left out the Wii, because seriously, that one is in the bag. They've always had the best exclusives and more of them, the experience is so different from the other platforms that it shouldn't even be considered in the race, it really is its own very different kind of monster playing by its own rules.

This last year was pretty predictable. The PS3 was pretty much the butt of every joke all year, the 360 got rid of 1st year growing pains with the luxury of no competition, and since E3 2006 the fate of the Wii was pretty much determined.

The next 18 months will be very, very interesting.

Microsoft is doing fine - they have a huge install base compared to the PS3, only did one price cut, have better financials and are already getting profit out of their console.

PS3's achievement of tracking behind 360's sales so far is like winning an honorable mention for third place - congratulations, you managed to track behind an expensive console competing against the PS2, and had to cut your price by 33% in one year (or less, in Europe) in order to maintain the sales momentum.

Sorry to be blunt, but it's just the way it is. In 2008 things might improve for Sony, but they need nothing short of a spectacular comeback to be on the lead (against the 360, the Wii is just unreachable for anyone).

@cAPSLOCK

I have to disagree with you. 360 is not in direct competition with PC. FPS on console is different on PC. Playing Halo on PC vs playing Halo on Xbox is very very different.

I think that your argument re. FPS games is passe. It was argued years ago when FPS games started appearing in consoles and time proved this wrong.

And I don't see how the PS3 distinguishes itself completely with the PC. With that said, if your argument is correct, PS3 is not in direct competition with Xbox 360 then.

They are speechless. They have no speech. (or maybe it is vacation time, hehe).

 If PS3 continues to LEAVE XBOX360 IN THE DUST at the current rate of 10,000 more per week, it will only take them 700 weeks which will be over 13 years. So PS3 would catch the 360 in 2020, I don't think Microsoft will mind.