I never thought the Xbox would last this long. If Microsoft doesnt make a turning point with halo this year (as in make money) I think they will or should give up. I think they have lost a lot going into the buisness and I think they would actually make money if they made 3rd party games.

 Recovering from 7 billion in losses is no easy task...  recovering from 2 billion in one year and then having to fight lawsuit after lawsuit for another year will not help.  The RROD is only one problem with the 360, the other main issue's are disc scratches, faulty DVD drives and freezing/slowdown for no reason.  Microsoft is only covering their asses for the RROD since it's so easy to recognize.  The other problems will be where the lawsuits point looking for money.  How much money in lawyer fee's does Microsoft want to pay out here?

I think 360 still has a lot of life. I expect MS will drop the price by $100 once the Falcon units come out (much cheaper to produce and much more reliable). This will have 2 major effects:
Eliminate the fear of RRoD problem
Drop the cost into the magic $300 range where mainstream gamers will gobble it up for GTAIV and to a lesser extent Halo 3.
I fully expect 360 to trump PS3 this holiday season (but Wii will continue to dominate), but it may be the last time they ever do so...

Microsoft has an army of lawyers already on staff. They are paying them one way or another. That's not the big issue. The big issue is that I believe they missed their opportunity window as I posted before. They could have dropped the price and sony's price drop of $100 would have been "forced" and would have been comic relief since it would have only matched the current delta. Instead, MS chose to wait and now momentum is clearly shifting. IMHO they should have announced BOTH an immediate price cut AND the extended warranty at the same time and BEFORE Sony did. The could have stolen Sony's ability to pick up any momentum. The window is closing FAST for MS to respond. Clearly they have to put the hardware failures behind them QUICKLY and get a price cut in place ASAP. They should never have allowed Sony a chance to pick up any momentum but they have done so in yet another strange MS behavior that seems to defy logic.

People are continuing to make huge assumptions about the effects of Sony's price cut.  If you didn't expect sales to be up 100% plus for the first couple weeks you obviously have never seen a price cut in gaming before.  We don't know what PS3 numbers will settle at and we don't even know if they will cut the 80GB to $499.  Microsoft is playing the waiting game.  Considering even at this pace it will take Sony a solid 5 years to pass the 360 in America I don't think Microsoft is too concerned about 2 weeks of expectedly strong price cut sales.

I see this holiday going like this:

1. Wii
2. 360
3. PS3

But the difference between 360 and PS3 worldwide for sales this holiday isn't going to be that big, even with a 360 price cut.

I think from now until Halo 3, the PS3 will outsell the 360 worldwide. Also I expect the PS3 to start outselling the 360 again in the first few months of 08 with MGS and Killzone hitting.

Next year the PS3 will really start catching up to the 360 and if FF XIII isn't too late to be released they will be all cought up by the end of 08 worldwide.

@gebx

What's the reason of this explosion of pessimism? Fact PS3 outsell X360 in USA during last two weeks isn't end of the world for current and future users. Even if X360 will finish as third it already secured support of devs... Cheer up.

I personally feel that the 360 could be in trouble.

The RROD and warranty issue:

MS are providing purchasers of the 360 with a 3 year warranty to cover probems with the RROD, broken DVD drives and other issues with the console. They reckon up to 10% of all 360 owners have had a RROD problem, which makes me think that it's alot worse than they are letting on. Rumours stating that all 360 (pre-Falcon) have an inherent hardware problem with the motherboard means that potentially MS could have problems for the next 3 years or so. It could end up costing them more and much more than they anticipate with the $1.1b (which is slowly creaping up to $1.4b cover).

360 hardware sales:

Everyone has been slating the poor sales of the PS3 over the first 8 months of it's release, but if we check 12 months ago, the 360 was posting very similar (virtually identical) figures. And the main point is, the 360 had no direct competition. The PS3 has the 360 and the Wii. Also add to this, the European launch of the PS3 didn't happen until March 2007, so in 4/5 months, the PS3 has sold nearly half the number of 360's and they have had 20 months to make 3.2m sales compared to 1.2m. The Wii has nearly caught up with the 360 numbers and will take over next month. Plus you have to take into consideration that the 360 price has always been $299 and $399 ($479 with the Elite). The PS3 has been generally $599 and has only recently come down to $499. A significant difference. Yes the 360 has a good supply of good games, but this does not seem to be making a difference.

2007:

2007 has been a poor year for the 360. Normally we should be seeing a better year for a console in it's 2nd year, but sales are down compared to last year. Whether this is to do with the competition or with the hardware problems, but they really aren't shifting units at all.

Europe and Japan:

Sales in Europe and especially Japan are poor (very poor in Japan). The Wii and the PS3 are outselling the 360 in Europe and this is without a pricecut for the PS3. This week especially sees the PS3 sell 60% more units than the 360. In Japan, it's a farce. The 360 has sold no more than 5k each week and normally only sells around 3k on an average week. The PS3 although not great sales is generally selling 9k minimum up to 14k this week. I don't think it will be long before the PS3 takes over sales of the 360 in Europe and then it will be onto North America.

Halo:

The release of Halo 3 in September/October is a huge thing for the 360. They need hardware sales to skyrocket for a few months after this release. MS will hope that Halo 3 and GTAIV will set them up for Xmas. But we will wait and see. I cannot see 360 sales going through the roof, although they will spike for a few weeks after both games are released, but could quite quickly come back down to the normal numbers again.

Price cut:

There have been rumours of a price cut for the 360 for months now. It's been on the market for 20 months without a pricecut and consumers are awaiting the news. It is pretty much certain that a price cut will happen pre-Xmas, although some people reckon it will happen around the time of the Halo 3 release. In either case. it needs to be a significant reduction. IMHO, all 3 units need to come down by around $100 each, but can MS afford to do this and still make the projected profits for 2002/2008? We will see!!! A price cut will definitely help with sales of the unit, but with public awareness of the RROD and other issues, will people buy in?

My view:

The 360 is in trouble.  Sales will pick up later this year, but over the course of 2008, they will start dwindling again and may even reach an all time low.  It has taken the 360 around 19 months to reach 10m WW sales (who knows how many of this number are replacement units or not).  It looks like they have only sold around 2m this year which cold easily be 1m-1.5m less compared to last year at the same time.  I reckon they will make around 12m WW by the end of this year, but will have an overall poor year next year and the year after.  I cannot see the 360 selling 40m+ units WW.  I honestly reckon they will find it hard pushed to get to Xbox number of 25m WW and this could easily be 5/6 years from now.  I think that the Wii will overtake the 360 next month and will continue to make space between them.  The PS3 won't really catch up with the 360 until near the end of next year, but will them push it's way into 2nd position this generation and then it's all downhill from then on in.

I may be proven wrong, but there just seems to be so much going against the 360 at the moment, than I can see nothing but failure written all over it.  Which is a shame! 

end 2007 :

Wii 16-17M cheapest console ...
PS3 8M saved buy europoe and japan
Xbox360 13.5M saved by NA

at the end, in about 7 year ...

Wii 135M
PS3 90M
Xbox360 45M

Are we referring to the PS3 price cut thats not actually a price cut because i still feel scammed by that...
Personally i think we are looking at:
7 million PS3's sold by the end of this year.
13 million 360's.
17 million Wii's.