@Rpruett
Very good post with excellent points. Though I feel you may have left out a couple.
Price Cuts: A lot of people believe that another price cut for the 360 will finish off the PS3's momentum, but I think they are sorely wrong. The PS3 is doing well right now on it's own price point and it's own merits. It has nothing to do with what MS has or hasn't done. As you can see by the charts, the 360 isn't doing horribly, but it is below the PS3.
Even if MS does a price cut, do you not think Sony will answer it? Of course they will. They have just started to see a real upturn in the sales of their product, they aren't going to let it go so easily. If anything MS will probably lower the price by $50 on the Elite around the launch of Natal later this year. However, by that time Sony will most likely have gotten production prices down to the point where they can lower the price by $30-$50, while still breaking even or having a small profit. This will completely take away any steam from MS's cut.
And for those of you who act as if the Arcade doesn't matter, why is it still on shelves? Don't act as if MS barely sells them, because if they did they would save money and stop producing them. To us gamers, the Arcade is a bare bones 360, but to "Average Joe" it's a cheap entrance into next gen gaming. Trust me, if not for the Arcade, MS would be selling even less hardware, and they know that.
Blu-ray: Some are so easy to dismiss it as "not needed," but it is here to stay. With the sales of HD TV's going up, so will the sales of Blu-ray. In fact, Blu-ray sales and rentals doubled last year, and it's only going to continue to go up. And the PS3 has one of the better Blu-ray players. As HD and Blu-ray becomes more and more mainstream, the PS3 is going to continue to be deemed the better value. And when this gen is over, I can imagine people picking up a $100-$150 PS3 for a gaming and Blu-ray playing system in the bedrooms and playrooms of many houses.
Speaking of Blu-ray, it's going to play an even bigger role next gen. With games getting even bigger, higher poly-models and most textures being HD, the space is going to be needed. And MS is either going to have to get on board, or face a backlash when their normal games come on 2 discs and large games come on 5-8.
One more thing people need to remember, this gen is truly like no other, so you can't just point out what happened last gen and that's what will happen this one. PS3's comeback pretty much slaps that notion in the face. While many were pointing to previous gens and previous months' sales, saying that the gap would just keep getting bigger and end up ~10 mil or more. Well, it's shrinking and most likely will continue to shrink.
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