Sony definitely has the advantage when it comes to hardware cost reduction... They've been doing it a lot longer and a lot better than MS.

On the other hand, both companies have put similar target dates on their chipset revisions IIRC. Given Sony's reliance on IBM for this reduction (just like MS), it will be interesting to see which hits shelves first.

As for profitability, MS is there already. They have the advantage of being already in the black going into July when the bigger games for both consoles should start appearing on a regular basis (other than the occasional release like GTA or MGS like we're getting now).

It will also be interesting to see if MS takes that time to attack NA for the Madden release. Most people outside the US don't understand how important it is in the US market to be "the Madden console". As it stands now, the 360 is shaping up nicely to fill that role for the next several years. But if MS sits around too long, they could easily start losing that market back to Sony.

At first, I was going to say a $50 price drop+Madden and Gears 2 bundles would be just the thing MS needs for the holidays. However, Sony would surely counter with a price drop of its' own, and they're sure to have Resistance or FFXIII bundles, which would surely help them more. So, if by some epically long shot they could pull it off, I think Microsoft could own the holidays (minus Wii) if they went balls-out with a $100 drop across the board.

I was just thinking... With MS working on a new chip set out to launch this year and Sony having announced a 45nm Cell awhile back with intent of launching this year, the next few months should be interesting.

A few points:

1. Obviously, the PS3 is outselling the 360. Not by a large amount, but enough to make MS sit up and take notice.

2. MS is aggressively attacking Europe with mixed results. Price drops helped a bit and it will be interesting to see how the 199 Arcade Halo/PGR bundle will effect Euro sales.

3. MS is sitting on one $50 price cut in 30 months in America. Obviously, sales are starting to suffer a little because of this.

4. Sony aggressively cut PS3 prices to great success in 2007. Now, after the recent earnings release, their statement that they're looking for profitability in the games division leads one to believe that a PS3 price cut is coming late this year at the earliest.

5. MS posted a modest $90m profit last quarter while Sony posted a slightly less modest $180m loss. Both seem to be geared on pure profitability from this point forward (with MS, it seems that they've been in this mode since Halo 3 launch).

So, how is the rest of this year going to play out? Personally, I see MS attacking NA later this year with a significant price cut to stop the bleeding. They can't let their biggest market fade away to Sony. Sony, on the other hand, is slightly reeling after another loss and I don't think we'll see a price cut until later in the year when 45nm PS3s are on shelves in abundance. I think they're realizing that they've fallen into the same trap MS did and are losing too much early in the generation to ever recoup the money back out of the PS3 and turn an overall profit on the console.

Overall, I don't think MS is as far out of this as people make them out to be. A $249 or 279 Pro would really shake up the North American market while I think MS can only hope to hang with Sony in Europe, keeping it close but overall, losing the market in the long run.

Dunno. These last quarter's earning statements turned out to be more interesting than I thought. I was shocked that MS managed to cut the Euro price and still turn a profit while Sony sat still and turned another loss. It unquestionably puts to bed that rumor the Sony was breaking even on the 40GB PS3. It's obvious that they still have a ways to go because both the PS2 and PSP are still offsetting PS3 losses (and at that, still not making it into the black for the games division).

In final, it will be interesting to see which company can get their new chipset out first and get the prices cuts and huge profit this holiday season. 

So you never feel immersed when you play videogames? That's gotta suck... I know I wouldn't find gaming nearly as enjoyable if i couldn't immerse myself in games. It's why I perfer RPGs where you can change the characters names and decide how they act... which sadly is a declining custom.

Honestly, I don't see anyone paying that much attention to Blu-ray until Lucas and Speilberg start making movies for the format. On top of that, they need to provide the uber-geek / early tech adopter crowd with fan favorites like LotR.

When those types of movies start hitting shelves in Blu-ray format, then we might see it start to take off. Until then, I think it will plod along with marginal gains. Right now, we're not getting many movies that really take advantage of the format and are over 2 years old.

Shit, I haven't even bought a Blu-ray movie yet. I have rented a few but with the pathetic selection available and the multitude of DVDs I already have, there isn't much point in me dropping $30 to watch mediocre movies like Spider-Man 3 or Resident Evil: Extinction

Nonono I immerse myself all the time :P and the reason I can do that is because of the responsiveness of the inputs, if the Motion conrols were really 1-1, the wii would be hands down the most immersive console to date, but because I find the inputs only work 80% of the time it's almost a guranteed way to strip all form of immersion out of what I'm doing. Its one of the reasons I can't find most 2-D fighters immersive, I can't get the inputs to work for me all the time lol. I mean swinging the wii-mote to swing the sword is fantastic, but swinging the Wii-mote, and getting nothing, friggin sucks. So my earlier statement was that I won't feel immersed "with the Wii."