My mistake, thats what I get for replying so quickly.

I pretty much agree with this.  I think MS should be (and almost certainly is) working to turn things around and I'm pretty confident that they are going to have something at E3 that they hope will do that.

Obviously a few MS supporters are touchy on this subject as many of you have stated recently you think people are out to get you guys with FUD.  I want to be clear that I'm merely being a realist here.  In terms of the numbers MS has absolutely lost momentum, but I don't for a second think that means they are down, let alone out.  Some of you jump to conclusions about where people are going with this stuff but I'm not one of those people.

Even with the Wii there is a loss in market share this year, it doesn't bother me to show that because facts are facts.  And actually I would say at least 1  point of slippage for the 360 and nearly all of the slippage for Wii were due to the PS3 increasing their market share this year.  But that is still a positive shift for Sony and while its not a 1:1  loss (ie its not zero sum game) for MS or Nintendo it is still a loss of momentum.  But perhaps I should also point out that this was only meant as an illustration of momentum and I'm not trying to say that this is the whole picture...this is merely one factor that is a part of the overall picture. Other factors like YoYI, public perception, supply, software sales, etc.. are all factors in overall momentum as well and there are almost certainly other factors you could point to as well.

Going through the factors I listed:

1. MS is slightly behind Wii in YoYI and both are trailing the PS3 by a fair margin.
2. Public perception is pretty clearly in the Wii's favor and while I'm sure some would debate between the PS3 and the 360 I will just say that Japan & Europe the perception is with the PS3 and in NA its with the 360. 
   
3. Supply constraints hurt the Wii's position as a limiting factor, and are not a factor at all for the PS3 or 360 AFAIK
4. In software sales Wii is really doing very well with the 360 not that far behind and the PS3 still lagging behind but has made quite a bit of progress.

The overall picture?  The Wii has remained pretty steady in the number one spot since last year in overall momentum, there have been gains and losses but in my estimation they have more or less balanced out.  The PS3 has gained quite a bit of momentum most of it at the expense of the 360 particularly in the EU/Others public perception area, a bit in the software sales area, and their YoYI has been tremendously positive. I definitely think that MS has moved from 2nd to 3rd in terms of Momentum since last year.

While some of those factors I listed are factual others are very much up for debate which of course leaves things open to interpretation.  But I will say that I've actually been following the situation since the beginning of 2007 on damn near a daily basis, so I definitely think I have a good feel for the situation. 

I'll also point out that the FUD many MS supporters feel they are under is in my estimation a manifestation of that loss in momentum.

Your first point is definitely something worth considering but in terms of momentum I think it is irrelevant.  Momentum is about the way things are going and how people percieve the way things are going.  In 2007 those sales weren't there and that factors in, in 2008 they are there and it still factors in. 

In short the general view of the performance and momentum of each console is legitimately effected by those differences and as such they really should be factored in

 uhm, ok first they have lost significant momentum even if their sales increase. This is possible beucase their copetition has gained MORE momentum making them look like they are slowing. Get it?

I beg to differ on the graphics point.

I have seen nothing yet on the ps3 that looks better than 360.

The 360 is losing momentum, but it does not mean its doom and gloom for it. The analyst fail to realize a few critical poiints in the current generation of HD gaming. Business model have changed, the insane increase in development cost have forced many developers to go multi platform on releasing their games, at the rate ps3 is going it'll probably catch up to MS at around 28-30 million units sold. at that level still won't convince developer to go exclusive only to one platform without some huge money payment from MS or Sony. just look at GTA IV or DMC 4 sales, why would a company going to release at one platform only when they can sell a few more millions copy by releasing it on both platform. When the game library is similar between the two system, price will be a big factor to help boost sales. MS will use this advantage on Sony and keep their market share very close to Sony, and the end result we'll likely see a 60:40 split on HD gaming market when this generation is over. I guaranteed you wont see that 120m VS 30M like last gen.

Remember gaming is niche to begin with, 98% of the world dont play video games if you say that PS2 cycle was the cap - which was roughly 150~160 million people out of 7 billion people bought a console in that cycle.

This furthered by the selling point of HD consoles being HD - HD adoption isn't a detriment or aide as it is a marker. People who want HD t.vs don't have to want PS360's, they probably just wanted a bigger more theatrical experience for cheaper and takes up less space than a crt. But the more people that buy HD tv's still attribute to HD gaming sales though, probably not in majority.

The above logic is also stating that HDtwin console owners don't all have HD televisions. But if HD tv sales are anything to go by and equating that with the ps2 cycles growth rate versus the current cycles growth rate.

I'm know it gives a nice explanation as to why Xbox360 sales and PS3 sales are equal or to the PS3's favor.

If Microsoft made it a point to say "Xbox360 can play dvd's in high def" then "We have a winner!" would be what goes through my mind next - strictly for install bases.