I expect it will be very close by the end of next year. I have been very back and forth on the exact timing for a while now, but very late 08 is has a slight possibility. Looking at it from a realistic view I would go with March of 09. The real factor here is how bad will 360 sell in EU/Others next year, and the same for the US. PS3 will sell significatly better than the 360 next year in EU, and if it can pull even in the US, then their is a good chance. The Gap in Japan will grow twice as fast as this year, if not more.

By years end, there'll be a gap of roughly 2 million I think, perhaps less.

@rocketpig
To reach your goal of "early 2009", it would have to outsell the 360 by roughly 110,000 consoles a week. That would put the PS3 somewhere in Wii territory.

40k-50k - Japan +60-70k - Europe. SIMPLE.
AND MORE simple, IF PS3 will start OUTSELLING x360 in USA.

You are impervious to logic bombs. This boss is bugged. I give up.

The PS3 ending up with a higher LTD than the 360 during 2008 is 100% completely impossible.

The PS3 selling more than the 360 during 2008 is possible, but far from certain. Unlike Sony, Microsoft can actually drop prices without hurting, and they're actually gaining developer support rather than losing it. I'd say the chance of the PS3 winning is 33%, although much higher in Europe and next to nothing in the US.

In total sales: no, the gap is too big. In yearly sales: Possible. We have to see, how well GTA4 performs on both platforms (XBOX360 has some advantages here, more downloadable content). Also we have to wait for a definitive release date for MGS4. These two games will be the deciding factors in my opinion.

Will the PS3 outsell the Xbox 360 for the year in 2008? Probably.
Will is outsell it by 7 million in order to pass it in 2008? Not a chance. Not gonna happen.

Sony would need to bundle a Wii/DS with all ps3 in order to achieve this.

Seriously, there is no chance for this to happen. The only games that are going to give a really good boost to sony this year are MGS 4 and GT 5.

GTA 4 will help more the 360 than the ps3, despite what you believe.

And those 2 games alone (MGS 4 & GT 5) aren't bigger than what Nintendo/MS are going to offer.

I think mired in the holiday season as we are now most definitely fuels ludicrous assumptions. Holiday sales are an entirely different beast when it comes to console sales. Too many posters are getting far to energized by PS3 sales when the factors that discouraged PS3 adoption all year long are far less prevalent in consumer minds.

First the price differential is still present, and the PS3 is still quite expensive. Still a hundred and fifty dollars more expensive then the Wii, and one hundred and twenty dollars more expensive then the arcade 360. That difference is still going to hinder the PS3 next year. The price will still drive consumers to their competitors. While four hundred dollars is expensive it is far easier to swallow while giving Christmas gifts. Not so much during the spring, or even the summer.

To exacerbate the situation most assume that Microsoft is at the very least is going to maintain that differential, or expand it early next year. Probably to coincide with the launch of Grand Theft Auto, and the drop will most likely be highly compelling. Further more Nintendo can persistently stoke their fire if the sales for whatever reason being to drop off in any market.

Secondly the library is still a major concern, and given the climate of delay its not going to shape up until halfway through next year. We are looking at over eighteen months without a single system selling game in regions outside of Japan. That creates a cycle of negative expectations. Gamers have and will continue to solidify their perception of this platform not having phenomenal games. This is going to drive down sales, and make for reluctant consumers. The doubts have only grown with time. Not to mention the still ever present loss of backwards compatibility that is going to drive back adoption.

Thirdly market share and I believe there is almost a conspiracy on the part of Sony boosters to not acknowledge this problem. The PS3 by the end of next week will hold less then fifteen percent of the North American market. They hold less then twenty five percent of the market in Japan. They hold twenty three percent of the other markets.

The only market where the sales look solid and good are the other regions. Where the PS3 is putting up serious numbers most suspect due to brand loyalty. While in Japan the numbers might look good. Nintendo has gotten back to those days of laying beatings on Sony again on its home turf. The Wii outselling the PS3 by over three to one last week. While we mock Microsoft in Japan. We should also take the time to mock Sony. Microsoft has a excuse to do poorly in Japan Sony does not.

Meanwhile its easy to be concerned for Sony in North America. Last week Microsoft outsold Sony by fifty eight percent, and if the early leaks from Ioi about next weeks Wii sales tell us anything we could be looking at upwards of the Wii outselling the PS3 by three hundred percent. Basically this is the best time for Sony to move hardware, and they may be tracking in line for fifteen percent of the market next week.

Sony is walking a fine line in North America, and you cannot really shrug it off. You cannot ignore Japan either. While the PS3 is safe in Japan for a while. The PS3 is a few bad months away from losing retailer support. A console slipping below ten percent of the market it very much a dead commodity. Retailer support drops off the radar, and the gaming community avoids it like the plague. The way we discount the 360 in Japan right now. The PS3 is perilously close in North America, and is looking at a hard year in Japan.

Do not let big holiday numbers fool you. In two markets the PS3 is not out of the woods yet, and a few more miscalculations could seal the platforms fate. Just as well as Nintendo upping production, or Microsoft going out and slashing prices by another fifty dollars. Which would help the 360 in every market as well as the PS3s very own massive price cuts have helped it.

We need to see the sales of the PS3 in every market in mid January to know whether the PS3 can hang in there, and there are an awful lot of reasons why it shouldn't compared to its competition.

Nice post, very informative and well put together.