my answer would be

good question, it seems everyone is blind these days.

The answer is simple...price isn't everything. Price wasn't a big issue until the PS3 wasn't selling at $600. People started saying the Wii was only selling that much because of the low price. Sure the price helps a lot, which we will soon see when the holiday season kicks in, but there's more to it than just price.

because 6 previous generations of experience say so.

gen 6 graph over 5 years: http://vgchartz.com/hwlaunch.php?cons1=GC&reg1=All&cons2=PS2&reg2=All&cons3=XB&reg3=All&weeks=312&weekly=1

gen 5 over 5 years: http://vgchartz.com/hwlaunch.php?cons1=N64&reg1=All&cons2=PS&reg2=All&cons3=&reg3=------&weeks=312&weekly=1

the generation losers: peak sales around year 3, sales stop by end of year 5.

the generation winner: peak sales in year 3-4, sales maintain much longer than year 5.

the 360 is finishing up year 3 - expect a year over year drop next year and a near hault in sales the following year.

the ps3 is finishing up year 2 - expect a year over year increase next year and then a drop the following year.

Its a lot of "I'll get what my friends have" and some "I want THAT one because its (trendy/cool/looks better/more familiar brand)"

did the last gen losers increase there sales over the privous consles. BTW did the last gen losers have this much 3rd party support. BTW this  is not last gen this is totally different

To overcome the 360 lead, Sony must keep their promise of a 10-year PS3 lifecycle (it's easier on the PS2 because it was so successful).

But to support that, they have to spread themselves thinly in developing PS3 and PS4-- which in turn can jeopardize PS4's chances.

it already is look at these numbers i recorded from vgchartz, these numbers are the totals since jan 08 til now:

PS3 is at: 7,037,679.
XBOX 360 is at: 5,612,954.
Wii is at 14,217,016.
I want to see what will happen next year when the price cut arrives or cheaper slimmer model.

Price cut needed... but doesn't look like it will happen....

Why would the Xbox 360 peak whilst the PS3 is not? They are essentially the same machines if you look at it from a game playing perspective. If they are going to peak, then they will both have their peak year in 2009 and then decline. The software sales/hardware sales of the Xbox 360 indicate a system which is still yet to peak, the majority of software/hardware sales have occoured in the last 24 months.

Yes.

In all honesty, I was in chatrooms arguing about the Playstation 3 costing consumers well above $500 USD before Sony made it's infamous announcement. Merrill Lynch had a great report well before E3 about what was going to happen:

http://www.engadget.com/2006/02/18/playstation-3-costs-900-sez-merrill-lynch-mob/

With those kinds of preliminary, staggering numbers, it was only safe to assume that Sony wasn't going to take a $400+ loss per console to allow sales to flourish at a reasonable ($400 starting point) price.

Since Sony didn't do that, I have always been negative about Sony's blunder. Say what you will, Playstation fans, but Sony as a gaming division has pulled a Sega Saturn this generation. 15 years from now, we'll look back and redicule $599 even more than we do now, because it'll go down in history as the thing that killed Sony (not saying they'll go under, but reduce their role as a 2nd fiddle player).

The Playstation family has always done well due to 3 pillars:

• Cost (cheapest and fastest. Invented the loss-leader concept of hardware sales)
• Software (always the best from the best)
• Innovation (always providing the next-gen experience)

Unfortunately, the Playstation 3 only has one of those 3 things. I assumed that, in the beginning, Sony would maintain something that resembled #2, but that utterly failed when Microsoft snatched up all the 3rd party games in the west, and Nintendo cleaned up in Japan.

Here's the best analogy of the Playstation family: Playstation 1 was a remarkable engineer that developed something truely ahead of it's time. Playstation 2 was a savy CEO that dominated his industry, and Playstation 3 is a spoiled runt living off of the coattails of it's predicessors. Where is the ambition, Sony? They've pulled the Sega Saturn, they've mastered the N64-type turnaround. They've done virtually everything that's counterintuitive to their business model. Yes, you can and should take gambles with your hardware, but they took the step backwards by forcing their loyal consumers to adopt to an overpriced, under-gamed system.

Those are strong words, but I think they're warranted considering the Playstation 3 is still in 3rd place. Say what you will, but Sony is still in 3rd place. The Playstation 3 has spent more time in last place than any other Playstation system in history has. That's not a good thing, that's a bad thing.

And to finish (and reiterate what I've already said): 15 years from now, if Sony fans still exist, they will deride this generation as the specific time that Sony had it all, and lost it like Atari, Sega and Nintendo all did at times before.

Kilter - I think the argument and assumption of consoles doing well, late in their lifespan has more to do with how well the console sold earlier on versus anything else. I don't hear anyone singing the merits of late lifespan N64 sales, do you?