I can't see PS3 ever overtaking 360 at this point.   The fact that 360 has been leading PS3, strongly, over the last several weeks in Europe (never mind NA where it always leads) shows that PS3 just doesn't have a compelling enough system to ever overtake 360.

But more to the point, I am increasingly convinced Nintendo will launch a new console holiday '11 or early-mid '12 and start a new generation.  If it's anything like the 3DS both MS and Sony will be forced to respond with new consoles of their own.     So even if PS3 stayed on the market for another 4 years after that (like PS2 has, but extremely unlikely since the PS3 is no PS2) and eventually outsold an abandoned 360 base, no one would give a rats ass.

Two years? Unless Kinect fails completely and Move is a huge success, no. But before the next generation? It's possible. Every time Sony cuts the price, PS3 gets to the top. And after a while, MS cuts the price and gets back to the top. However, even with all the price cuts PS3 seems to cost more than 360 and because MS can't cut the price of 360 forever, I'm guessing PS3 will eventually defeat 360. Of course there's the chance that once 360 gets to a certain point, it will totally crush PS3 and then PS3 wouldn't be able to rise again... But I don't think it's very likely.

At that point, the next generation should be starting, shouldn't it?

It's not a point I can be proved either right or wrong on so I cannot really say much to change anyones viewpoint.  The only thing that has changed since the 360 was first cracked for piracy until now is that originally it took a lot of research and was quite daunting to hack a 360 to play copies.  Thanks to a certain application I will not mention the name of here it's not a difficult thing to understand anymore so there is more people offering the service. 

I would say the number of consoles banned over the years though does support your suggestion of the userbases being closer than the sales figures suggest.  I'd estimate there must be somewhere between 1-2 million consoles that are banned now and when tied with the 360's higher failure rate intially there is certainly not 5 million more consoles out there.  Perhaps it's a bit of both, shame we don't have accurate figures of failure rates and console bans for the respective consoles to extrapolate the data.

In two years it will not, and also not ever. The year headstart for the 360 is what did it, I think. They've been too equal in sales since the PS3 launched, which was almost four years ago. If they're basically equal after four years, I think it's a pretty good indication that they're going to be equal for just about their entire lifespan. The only way the PS3 would overtake the 360 is if its lifespan lasted a year longer, but I'm guessing that they'll end the same year. It might make up a couple million at most, but when both consoles are done the difference should be somewhere within the 3-5 million mark in favor of the 360.

and then Sony drops the price of the ps3 to 199.........

why oh why do people always seem to ignore the fact that the lowest selling ps3 sku is at 299, remember the ps3 during the time it slaughtered the 360 due to the price cut last year.......was STILL the most expensive console on the market....

Those were all the people who were waiting for a price drop. They were fans of Playstation that didn't want to spend $400-$600, but they'd buy a Slim for $300. Those people have all dried up and Sony isn't going to drop another hundred off the price becuase they only just started making a few bucks for each system sold. Sony also knows that if they drop MS will drop and they'll be losing money on their system and MS would get the same boost. We aren't gong to see a $199 PS3 untill within six months to a year of the next generation.

The next PS3 price cut will be $299 to $249 on the cheapest model. Only $50 price cut. Increased HDD plus game bundles with extra value without a price drop would be the best business model. PS3 is still selling well at $299 and $399. Another $100 price cut is a bad business decision. Finish second is not worth it if it means taking huge losses in revenue/profits. Settling for third place and making a profit on PS3 to set up the future would be the best business decision. 

$399 to $299 is only a 25% decrease in sales price. $299 to $199 would equate to a 33% price reduction in the sales price. Lower profit margin and most likely a substantial loss per console sold with another $100. The extra console sales would generate bigger losses and would not be offset much by increased game sales.

It's not even a distant third right now. Not if you gauge it by previous generations that is. None of the consoles are failing, to the contrary they're all very successful.

I wanna know where your getting this insanity from.

360 will stay well above, for this November Microsoft is unveiling their 99.99 famliy 4 pack for Premium XBL membership, allowing groups of 4 to put down $25 a piece.  360 XBL accounts will rise dramatically, and so will consoles.  Everyone that has been wanting a price drop on XBL finally get it, because we have to remember that the 360 still doesn't appeal to people who don't want to pay for Premium Membership.

Next year the 360 will see it's most profitable price drop, sending it's 299 edition to 249, and even maybe (just maybe cause Microsoft can still profit from it), a 199, to 149 price drop.  The only reason why I say this price drop will take place is because of Kinect.  Current Kinect bundle costs 149 149=299.  With the decrease in Kinect price from 149 to 99.99, the other bundle will have to drop from 299 to 249, and the arcade will drop to 149.

Thinking about the Arcade going to 149, it has to if they have a price drop for the Kinect.  If the Kinect bundle is only 50 dollars more than the arcade, you will be paying only 50$ for the Kinect.  Maybe they won't push down the price JUST so that the Kinect does sell more.  IDK.  I just opened up a can of worms I'm not sure about.

Help me out here please.  My Math:

Current Kinect bundle and Aracade bundle:

2010: KB 299/ Arcade 199

with Kinect costing 149

2011 Next years Kinect price drop effect (option A and B):

Option A)  KB 249/ Arcade 199

Kinect: 99

Option B)  KB 249/ Arcade 149

Kinect: 99

But the 360 can go down to 149, cause the Hardware is so old, it's easy.  The PS3 has a still strong proccessor, and a expensive blu-ray player, which is really going to hurt them if they try to bring down price.

Next year could actually be 360's best year, I didn't even think that before typing this.  The Wii will go down to 149, but the Arcade has always traced itself with the Wii, even though it has more stuff inside compared to the Wii.

Anyone have reactions to my ideas?  I could be missing something, and if I am, please bring it to my attention.

I'm taking Option A, Microsoft want that bundle to be nice a sweet to all those buyers.  "What, I only pay $50 more for the KB to get Kinect?  Ya, Sure, I'll take it."