As far as what really matters, if Sony is still behind by the time the 720 is released, then they lost this gen for all intents and purposes. If they give MS another year head start(or even 2 year) then they will be monumentally screwing themselves again.

Anything past the date that Microsoft actually stops supporting the 360, is just fodder discussions for each respective fandom. If Sony does focus on outselling a dead Xbox 360, instead of competing with the next Microsoft console, they could kill their brand, just to collect that achievement.

As for this gen, expect MS to counter any Sony momentum changes with harsh monopolistic tactics that Sony can't possibly compete with at the time, just as they did with the 199 360. Unlike Japanese companies, MS isn't slow to change, and they directly respond to changes in competition. They are NOT like the Sony/Nintendo battle. They are not arrogant enough to play fair. They will press their advantage, and they will beat the PS3 up until the next Xbox is released.

Remember the reason you hate them? They still live up to that.

Lord - it's not just the 360, xbox, or zune.

Okay, let's first assume that a PS3 price cut and slim will change the sells around (a lot) in Sony's favor, how can Microsoft counter it?

Well, you can say that a price cut will allow them to counter it, and you know, it's a good possibility.

But I feel like a lot of pepole are anticipating a PS3 price drop, not a "next-gen console prrice drop", a lot of Sony's fans are still waiting for them to lower the price of their console, a lot more pepole than the ones who wait for Microsoft to lower the 360's price (I base my assumption on the fact that PS2 sold a lot of consoles, thus getting a lot of fans, a lot more than what the original XB had).

So basically, I think that the difference between us is that you think that it is merely a matter of price difference between the consoles, so if 360's cheaper = it sells more, while I think that Sony still have a lot of fans, fans who just don't have the money for a PS3, and will buy it, and only it, just because it is Sony's console.

I'll actually take a fact to show my point.
How come that the PS3 sold more than the 360 in it's first year, while having competition, an overwhelming price tag and "NO GAMEZ"? the answer is simple and illogical - because it's Sony.
I don't see why the "poor" fans don't exist anymore while the "rich" fans who bought the console at lunch still are.

I doubt so many PS2 owners would wait three or four years to jump in this gen, just to wait for the PS3 to come down in price.

How many PS1 users have waited 3 to 4 years to jump in last gen?

In america I understand your point, but in europe, the PS3 costs a LOT more, while monthly salaries are lower in almost all countries.

I don't think that the PS3 will catch up to the 360 in America, but I think that it will catch up to it and sell a lot more in europe, and maybe (maybe) sell more than the Wii in Japan.

Well, many people just wait to their favorite games to realese in the system to buy it, because it's pointless having a system without the games i like. This is the point of System Sellers like GT and FF, make people buy a system instead of another. PS3 still have chances to take Wii in Japan if release good games and the gap in EU for 360 is pretty small, nothing that GT can't sell. The only region I see 360 still the biggest HD system is America, there nothing can change the sales.

People were still buying Ps2's 3 and 4 years into last gen who had Ps1's and people are still buying Ps2's to this day.

The gap between ps3 and wii in Japan is 5 million... And also the fact that the wii sold 24000 units there this week and ps3 only 10000.

Sure, but what will happen when FFXIII (Famitsu's most anticipated game, and the first FF on this gen's console, games that usually sell 4 mil copies) comes, and Versus, and ToV:sigma, and other JRPGs?

Edit: Also, what will happen with a PS3 pricecut?
First, let's consider the fact that the PS3 outsold the Wii in Japan for a pretty long time this year, even when it costed a lot more.
Second, I think that by going down from 400$ to 300$ (or the equivalent in Japan) you market increases by a much larger amount then lowering your price from 250$ to 150-200, so a PS pricecut will have a big impact.
Third, Japanese pepole prefare their consoles much lighter, so a Slim version of the PS3 can cause quite an impact there.

I would happily agree with Sony releasing they're console on time than releasing ahead of time to jump the competition, resulting in the largest hardware failure rate of like.....all time. I don't believe that gaining marketshare is more important than screwing the consumer

/shrugs