Actually that depends on which one has the most software sales towards the end of this generation.  So far the PS3 is much more likely to be discontinued first at retail, especially in the Americas where it is 9 million behind the 360 in that region alone.

The only thing you fail to take into account is market saturation.  Sony's new affordable pricing and any further actions are coming way late to the game, so any future incentives will be hitting less and less possible buyers.  I think 3rd place regardless of what Sony does is guaranteed.  Natal does play a big role in all this, but even without it, the 360 should be more than capable of maintaining a 1/2 to 2/3's price of the PS3 until they both stop production.  I wouldn't be surprised to see a $149 Arcade and even possibly a $199 Elite by year's end, and the Elite would only be losing about $50 at most if it went that low.

Prices for the rest of the generation (my prediction):  PS3 - $300 / Xbox 360 - $150/200;  PS3 - $200 / Xbox 360 - $100/170;  PS3 - $150 / Xbox 360 - $100;  Both consoles final price and are discontinued shortly after the new generation starts.  If Sony for whatever reason manages to keep making PS3's at this point, it will drop to $130 then to $100 after a few more years before finally discontinuing.

^ Natal will save the 360, mark my words. The 360 as a console is tiring (not software wise), honestly, without Natal it wouldn't stand a chance. There is only a few meaningful price cuts you can use, and MS have used the vast majority.

I don't think anything can get Sony out of third now. The damage has been done. Sure, PS3 sales will increase quite a bit, but I expect them to go back to normal levels once Natal comes out and/or the 360 Elite goes to $250. Pricing aside, the PS brand has taken quite a hit. It just doesn't have that same "magic" that it used to, and I'm not sure a price cut can bring it back.

The gaming world is so new that you can't really look to "history" to predict the future. This generation is a whole new ball game compared to the last, and the previous one before it.

Can the PS3 outsell the 360? Yes, it's pretty much gauranted til the end of the year, and considering Microsoft cannot undercut Sony again ($199 elite) it's likely to continue.

As for the Wii, that's up to Nintendo, having their console so close to the same pricepoint as Sony and Microsoft is extremely risky. They might decide to go with the whole "We offer a different experience" and keep the price point, but thats likely to hurt sales. Or they can reduce the price to continue being the cheapest console, in which case the PS3 is not like to catch up.

Like I said, its a different generation, the Wii is out doing its own thing while the PS3 and 360 duke it out, and in my opinion the PS3 has what it takes to catch up, and pass the 360.

THE. WII. IS. ALREADY. MORE. EXPENSIVE. THAN. A. 360!!!

360 its the cheapest.

i believe that ps3 will outsell 360 average weekly sales and close the gap to 3 million but then natal will launch and make the gap bigger by 1 million....

Until the Wii is properly acknowledged, I'm not sure the landscape has ever really changed either way.

To be quite honest I'm not sure I very much care if any of the "next generation" consoles become more popular. It seems clear to me that most people were not looking for upgrades anymore, so they found alternatives. Most of which are being holden back by lack of acknowledgement.

You can't assume it will/wont

=)