I have slightly different numbers:

30 August 2008- 3 January 2009

PS3: 4.6 Mil

X360: 6.7 Mil

Dif: 2.1 for 360

 29 August 2009- 2 January 2010

Ps3: 8.3 mil

X360: 5.6 Mil

Dif: 2.7 for Ps3

I never said the Xbox is doomed. But the whole situation is different and not comparable. PS3 has had a bigger peak year so even if it falls it would still outsell X360. And as I said 360 already peaked it was more then a year in decline and the little data we have shows it goes on. 

But there are many factors which can influence the situation PS3 wasnt doomed after 360 outsold it and 360 is not doomed after PS3 outsold it. But there is a strong possibility that Ps3 will outsell the 360 in the next 18 months. And this can happen without doing miracles and even when the pace is slower then now. 

But who cares we will see what will happen. I wouldnt be pissed if the PS3 would not sell more Hardware then 360 but I am still confident it will happen I always said it even when it looked bad for PS3 so I stick with my opinion.

Your reasoning for why Microsoft would or wouldn't use either Blu Ray or HD-DVD don't make sense. They wouldn't not use Blu Ray for the same reason why Toshiba are producing Blu Ray players. If it makes sense from an application perspective then they will use the technology. The main pro for Blu Ray is the playback of movies however that costs $9.50 per player to implement. Sony already pays Microsoft a lot of money to sell computers with the Windows operating system. It doesn't bother Sony so why should it bother Microsoft to pay a little of the Windows money back?

Because I think Balmer and other MS execs are a tad more spiteful by nature. And its actually not even sony so much as it is other members of the consortium like Sun. You are right that this would likely not, in of itself , inhibit MS from going with blu-ray. However, the other reasons are sound financial ones, and when you combine the loss of face , loss of control of the platform and standards ( which is why they pushed HC-DVD ) with sound cost and engineering reasons, suddenly blu-ray becomes a hard sell.

 If they come out with a cartridge based platform, they will then be able to work their own deals with media companies as well to release product on the platform. It will actually be appealing to the media companies, because it will be an entirely digital distro system. Basically, at Best Buy there will be a Kiosk that has a HDD with 1000 movies on it, all encryped with encryption that requires an Xbox or other MS-media device to play. You will pay and install it on your "MS-Secure-Card", rentals will also be possible via this system. BigMedia likes this idea, because it saves them the overhead of printing disks and up-front royalty, rather they maintain no overhead and get paid royalty.

 Anyhow, I digress, and things arent set in stone yet by any means. If MS had to caugh up a new system this year, it would likely be blu-ray. But they dont, so it probably wont. They will have an opportunity to take control of their own media platform, and they will grasp that opportunity. MS doesnt need a new system out soon, they just need it out before Sony.

I would say Blu Ray becomes a hard sell when they consider it in terms of the other means of distribution out there. Going Blu is completely counter to their digital distribution and the additional fixed costs per console for playback and for the drive itself take away money which could be spent on other areas such as performance, features or alternative means of distribution like cartridges. So yes, they would prefer a format they can control, even a derivative of Blu Ray is fine so long as they can own it.

As for cartridges, a unified system of content delivery sounds pretty good. However, they would only really head in this direction if their efforts in colaborating with TV and other media device manufacturers succeed. They have several car manufacturers on board, they just need some TV manufacturers and media conglomerates to get on board with them. Music companies will without hesitation because they hate Apple's dominance of the online music distribution market, its just the movie/tv producers which may hesitate. Im not sure what they would call it, a media passport maybe?

My best guess for an appropriate platform for a media 'passport' style system would be flash based. Its only a means of delivery and loading it up quickly is fundamental to their design. They would probably need something like 2-300MB/s write speeds or 12-18GB/minute and they ought to price the games at $5-10 less than new optical discs to put a small dampner on the used market and to provide incentive. It would still probably be cheaper and more practical to retain an optical drive (red laser HD-DVD would be best) and to use both methods of distribution at once.

It would seem like a bit of a step backwards to stay with the DVD format as a soft distro device, but with few exceptions, current game resources generally don't spill drastically over the limitations of DVD.

Would the extra storage be a big positive for developers? No question there.

Worst case scenario; DVDs could still be used to distro games, even under the hypothetical situation where ALL games require multiple discs (which has yet to happen in the PC gaming world as of now), a console could simply move to the very PC solution of full installations (insert boos here) considering that it's a given that any next gen console will have a significant internal storage solution.

Personally, I don't think there's much point in quibbling over what optical format MS should use to distro their games.

If the current generation lasts long enough, we may well move forward to a more disc-less distro system (doubtful given the cheap, convenient solution optical offers) that places emphasis on DD and possibly kiosk download solutions for those without net connectivity (currently impractical due to bandwidth restrictions) using HDD based cartridges (SSD may still be too expensive, even in the near future).

Why not? The developers haven't made sufficient profit on the 360 platform yet, they want to wait. The 360 crowd wants enough support for the 720 right? If so, then you would want to wait a bit.

Training for programmers, purchase and use of game engine, purchase of other technology, etc all costs $$$$$ and this is probably why we typically have a 5 year period between generations.            

Either way, both consoles are supposed to come out in 2012 so this year eary business just wont happen.  Sorry. 

I suppose the other reason why "jumping ahead" with an Xbox 3 release isn't a particularly great idea is that unless it's supposed to surpass the best PC gaming has to offer from a hardware capability perspective, why bother now when the task would only lead to a console that was prohibitively expensive?

I'm not particularly convinced it's necessary until PC gaming on the most current builds results in games that just don't port well at all to consoles without significantly downscaling the experience (and no, lower res, lower frame rates, lower AA do not qualify in this respect).

It's not as though the best Xbox games to be seen aren't in the near future rather than the past and until the level of games plateaus or the 360 is no longer a profitable platform, why flip the reset switch early with a replacement console?