I've concluded that Pachter doesn't even play games. That's his problem.

This industry is fad-based and very picky; if you don't understand what motivates us to buy a certain game or console system, you'll never predict anything accurately.

Prime example:

Pachter believed that Blu-Ray>Waggle while damned near every gamer out there saw the Wii and immediately thought Waggle>>>>>>>>>>>>Blu-Ray. If you don't understand what drives the consumer to drop $300+, you're doomed to failure.

Exactly, he has no understanding of what drives the casual market consumer.  There is no such thing as brand loyalty in gaming.  There never has been.  The Sega took tons of NES players, the PSone took even more SNES players, and the Wii is taking PS2 players.  Brand loyalty does not exist to casual buyers, and they are what make the market.

he must be living on another planet

This is from May 7th, man.

 But I can also understand where Pachter is coming from, for the reasons Rocketpig mentioned.

It's not just that he (probably) doesn't play games. Even if he did, the value of "fun games" is basically unquantifiable, while the value of things like Blu-Ray (or any format upgrade), High Definition, "Brand Value" and any multimedia flexibility are all a bit easier to pin down. Thus, Pachter and his cohorts put more stock in the things they can quantify, and less in the things they can't. 

Yeah, I agree that that's why.  It's just that he seems to completely miss why people play games, or he at least never accounts for the new and unknown.  All he can think about is the technology and the brand value and can't seem to imagine why anyone would buy something cheap and fun.

What does the casual gamer know about the consoles?
Xbox 360 is a gaming console just like the last-gen. PS3 is a gaming console just like last-gen, but they've got a next gen Blu-ray drive. Ofcourse both have better graphics. Wii is the same console as last-gen, but with a new motion controller.

This is what they know about exclusives: Xbox 360 = Halo, PS3 = Gran Tourismo, Wii = Mario. Ok maybe a few other games, but not much.

Anyway games don't really matter because the casual gamers likes Madden, FIFA (not PES), Spiderman and ofcourse a Halo, MGS, andso on. But that's not because those are good games. It's because these games get lots of money for promotion. There no casual gamer in the world who bought a PS2 for Shadow the Colosus or Okami.

You only need to know that movie games sell well and the highly promoted exclusives. 

You don't have to play games to be a good console analist. Or do you need to wear lipstick to be a good fashion analist?

When Blu-ray has won the war in 2009: PS3 $300 Standalone Blu-ray player $100 360 $200 (premium). Consumers will think PS3 is as cheap as 360, because of Blu-ray. Wii $100 and we know it will get a boost in sales with this low price. But it can't stay at this lowprice until 2011.

Wii dominance will be over after 2009. Because they can't lower the price anymore. Before that 360/PS3 sales are low or average. Developers need to make games for Wii and a PS3/360. There will be no major exclusive from a third party developer, just because making these games costs a lot of $$$.
Microsoft needs there sweetspot this year. And buy some more exclusives. Best would be the 2 upcoming GTA games, after GTA4.

I believe that casual gamers look at value of there consoles AND the games they want (most likely multiplatform).

Er... he's proven time and time again to be a horrible console analyst.  He hasn't been right on a single prediction in the last 3 years.  I pretty much disagree with everything you said also.  Casual gamers buy games based on 3 reasons.

1.) The price. This is an obvious one. Historically, casual buyers will not purchase a system above $200. The PS3 will never reach this, and the 360 won't till near the end of the generation (not counting the core, which will never sell). Neither the PSone nor the PS2 experienced much success at all till they were below this price point. They were the first 2 real casual market systems.

2.) The most games. Another one that you would think is obvious, but for some reason people seem to miss. Casual consumers walk into a Walmart and see a wall full of PS2 games in front of them. In the back are cases less than half the size with Gamecube and Xbox games. They buy the PS2, because it has the most games. This is exactly what's going to happen to the Wii (and is already happening). It has more games than the PS3 and is gaining on the 360 fast. The game racks are in the front of the stores, right where random casual buyers will see them. It's the same deal with the DS vs. the PSP. The DS wall is twice as large, so it attracts the casual.

3.) The "next big thing." I always hear fanboys and analysts talk about some supposed Sony "brand loyalty." There is no such thing to the casual consumer. To the contrary, they are always looking for something completely new, and unique. They aren't loyal to a brand, because they are CASUAL. They buy whatever interests them at the moment. In this way, the hype behind the Wii is a giant beast that feeds off of itself and expands. The fact that it's always sold out, word of mouth, and the media hype behind the system just send the Wii into a state of exponential growth. The same thing happened with the PS2 and PSone. It has the media attention, and that's ALL it takes for the casual. The people who are talking about 80 million PS2 owners sitting and waiting are crazy. 80 million PS2 owners were casual, and they are buying the new casual system. The hardcore barely make a dent on the market, and they are the only ones who have anything like brand loyalty (and certainly not all of them either).

Being that 80% of PS2 owners spent less than $200 to buy their  PS2 what portion of the userbase do you think is willing to spend $400 or more on a PS3?

Would it be fair to assume that the absolute maximum number of PS2 users that are willing to buy the PS3 before it is $300 or less is 15 Million?

This means that in 2009 when the PS3 finally makes it to $300 the largest userbase you could assume it would have is (roughly) 15 Million users. How many exclusive games does 15 Million users buy you, or better yet how many games will even be ported to your system with such a small userbase?

Value in terms of videogames comes directly from library size for most gamers, the higher price will lead to lower sales which means that the PS3 will be of lower value than either of the other systems.

1. So when Core is $200 still the premium will sell better for $300. That's because value is more important than price. In this theory when 360 (premium) is $200 and PS3 is $300. PS3 has more value than 360 because of Blu-ray.

2. You're right on this one. Although I don't like to compare consoles with handhelds. Because I think the average age of handheld gamers is much younger, than the average console gamers. Too different to compare.

3. I think there is brand loyality especially, when console don't change too much. Like NES -> SNES and PS1 -> PS2. We still have to wait and see if it's really a Wii hype among casual gamers. All the Wii's that are sold, they could easily be the Nintendo Fan Userbase from NGC 22mln. I also believe the Wii will do very well. Not for the full 5 years. 

PS2 still has support. 80mln casuals are still happy. There will come a time when they have to choose between a gaming system 360 or being loyal to get a gaming system with Blu-ray and all the franchises they like. It's obvisious that that will be more expansive.