Microsoft needs there sweetspot this year. And buy some more exclusives. Best would be the 2 upcoming GTA games, after GTA4.
Because the Wii is currently dominating only because of the price drops it has experienced? Oh wai...
There's a fundamental weakness to the argument that the Wii will stop selling well by 2009. Perhaps it won't be as dominant on a per month basis because more people will be able to afford the PS3/360, but there will still be more people who want it. Wii sports in particular, and motion control in general, interest casual gamers greatly. Gamers who aren't even interested in gaming with a regular controller.
People stop by to visit my family a lot. When they stop by, we show them the Wii on a 50" 1080p set. They don't think the Wii looks bad -- many of them don't know what video games are supposed to look like and neither do they care. They act like they're humoring us to try it, but once they do they want to know how they can go out and buy one for $250. They're very disappointed when they find out they can't go buy one just that night.
Those people won't change in two years. If we brought the exact same people into our house and showed them the Wii just like that, they'd still want to pay $250 for it at the end of 2009. The Wii sells itself once people try it, even casual and non-gamers. By contrast, almost none of those particular people would be interested in Gears of War. Gears of War is hardcore gamers' game, as is Final Fantasy and Metal Gear Solid.
People who say the Wii will die early this generation are fooling themselves. The people who want a Wii now are part of the same set of people who'd want one in five years and would pay the exact same amount of money for it. They're buying the Wii because they're discovering it, not because they are in to games and want a new system.
Many hardcore gamers also buy the Wii, of course -- the new control scheme is well worth the price of admission, especially for games like Godfather -- and perhaps they'll grow less interested in it by then. But gaming's largest audience will be the one Nintendo built with the Wii and DS, and most of them will continue to love it.