I will not comment on who is gonna win this next gen in terms of sales numbers bu there are some obvious trends out there. Here is situation of the firms compared to the last generation war.

   Nintendo is a definite winner with wii, no matter whether or not its gonna finish at first place. The Machine is profitable from the start-up, Nintendo fills the market with massive amounts of first party titles that sell like crazy, bringing up huge amounts of profits. The console also was cheap to develop and is now cheap to produce. Even if the "innovation" hype wears out, The machine will sell, probably more than N64, possibly more than SNES, and maybe even more than NES. Regardless of the competition leader in the long term in terms of hardware and software sales, Nintendo is the real winner in this generation in terms of profits.

  I dont know if I can say Microsoft is a winner, but they are certainly in a much better shape now with X360, relative to Xbox. The machine has reached 10 million mark when Xbox had reached only 6.5 million (with aligned time frame), which is a 50% boost. Xbox had a lifespan of about 4-5 years, and X360 will probably have about 2 years of longer than this. X360 has more third party support and now is the preferred main console (while the opposite was true for PS2-Xbox competition). They will certainly sell more consoles this time, firstly because of earlier launch (giving an advantage of extra 6 million consoles), secondly due to weaker competition from Sony, which delivers similiar content (rather than the Wii), and more proper pricing strategy thanks to lower costs. I wouldnt be surprised if X360 ends up selling 30-40 million consoles (compared to 24 million Xboxes sold).

   Sony is a definite loser. It doesnt necessarily means that they will have too pull out of the console business or never see the surface with PS3 to be profitable on annually basis or overall, but a slump from having 70% of the market pie with a 120 million installed user base, to much lower figures, lagging behind all rivals is dismal. Add this that the much hyped PS3 is not that overpowered compared to X360. Lets assume that PS3 finally takes the lead in the business and proves profitable at last. Even so, Sony is a loser! Why? Because They can never make great profits overall due to huge amounts of losses incured at developing and producing the machine, and they will be lucky to make 1/10 of profit that Nintendo will have done. Also It really is a state of the art gift to push the supreme market leader down to the afflictive position it holds now. The only gain, though unknown to what extent, is the probable win of the Bluray format.

Good analysis.  A couple of points to add:

Nintendo - They've always focused on costs and profitability.  They don't have other divisions to fall back on to make up for losses in their gaming division.  They also don't have an objective beyond great games and software for their machines.

Microsoft - They got into the industry because they saw Sony as a threat to their core business (Windows).  They believe the next great platform battle will be in the living room and are looking to dominate this space as well.  They recently did something similar by launching the Zune after their PlaysForSure plans to improve third party support against Apple failed.  As long as the Xbox 360 causes Sony to lose market share (which at this point is a given), then the 360 has done what it needed to do.  Of course that doesn't mean that they won't try to make even more money from it.

Sony - They've often focused on pushing their own proprietary formats and standards.  Of course there is a lot of money to be made in licensing these technologies, but Sony has often been at the losing end of any of these battles -- VHS vs. Betamax, Memory Stick vs. SD, and I have no clue what the UMD thought it was going up against.  They used the PS3 to push the Blu-ray agenda, and so far the system is one of the few saving graces  for the format.  Without the PS3, HD DVD would probably be in the lead in the high def. player space.  But the major problem in that this 'war' is really a small battle right now.  Most consumers don't care.  And with a lack of games and hype, the PS3 remains in third place.  So while they may eventually win the high def. player battle, Sony may lose the even more lucrative video game business.

Memory stick is kiking sd's ass. Umd noone is buying them cuz of the mistake of 2gb+ memory sticks. When did nintendo ever make a stupid game? wow never thought of that. You guys judge the nexgenwar like if you lost already in the begiining. It will change dont worry.

at Steve 3.2:

Your analysis is pretty good and complimentary to mine, thank you. As you implied, MS might actually be making profits overall for present or future aspects since it pushes Sony away from the PC and internet business, although this is hard to gauge.

at leo-j

Memory Stick kicks SD's ass, oh come on, SD is universal while Memory Stick is exclusive to Sony products (as far as I know) and I have never used memory Stick ever or seen anyone using it with non-Sony products.

It may change, due to Strong Playstation, but that does not change a drop of what I have said.

Please back up your Memory Stick statement with some facts and figures.  Anecdoctically, all of my devices besides my PSP use SD or a form of it.  To my knowledge, Memory Stick is generally only found on Sony brand devices.  I therefore don't see MS as being a dominant format.

It's a fact that Nintendo doesn't always make the best games.  Case in point: Pokemon Battle Revolution.   But they have made far more good games than most other developers.  That's their focus and the point of my statement.

I didn't judge anything and left it open.  I do expect things to change over the next few years.  Could be better or worse for Sony.  (shrugs)  And freedquaker was just stating that the PS3's initial and continual losses may make the system a financial loser in the end no matter where is places.

im always amazed at how a new poster comes here and regurgitates what every human being has said countless times as if hes had a revelation and we will FINALLY be exposed to the truth of the universe.

The fact of the matter is there is no such thing at this stage for a "brief" look at this generation. If we go by the first 80 weeks of the PS and the 64's lifespan the 64 sold more. After roughly 52 weeks into the lifepsan of the DS and PSP they had both sold about 10 million copies i think we have seen whats happened since then. 35 weeks into the xbox's life worldwide it had sold about the same (500k less) than the PS2 at 35 weeks into its lifetime.

Granted we have had the Wii and PS3 out for 28 weeks and there are always different variables, but theres really no sense in declaring anything at this point. just imo.

EDIT. after 52 weeks the 360 has sold about 1 million more units worldwide than the PS2 had at 52 weeks as well..... 

It's NOT fact that Nintendo doesn't always make the best games. It's all a matter of opinion and preference of what kinds of games you like. The same could be said for Sony and Microsoft.

 also you cant compare one without the other. Over the next 5-7 years its going to be those sales that drive the "firms" profit in the respective divisions. At this stage everyone but Nintendo always loses big, its about the longevity.....also comparing these vastly different companies as a whole...(videogames, software, hardware) is assenine. Also im sure there are plenty of other companies more successfull than nintendo that dodifferent things it would be right or fair to say those companies are better than nintendo because they do different things.

Personally I advoid any sony products that use Memory Sticks (phones, cameras etc) as I have so many SD cards that my other devices use. I wonder how many people feel the same way.

SD cards are the standard for Cameras and other devices. I'm surpised we don't see SD slots on computers yet. As for memory sticks... um... what do they even look like? I've never seen one, or a device that states it uses them.