I do not see why the 360 and PS3 cannot co-exist. This thread presents the situation as if one will succeed and the other will fail, which I simply do not see happening. Both companies will have their share of exclusive titles (Halo3, GoW, etc for 360 and Resistance, Heavenly Sword, etc for PS3).
As long as both systems have a good install base (which they will), developers will not have a problem (well they might, but they'll do it anyway) developing for them both. It reminds me of the early days of the API wars on the PC. Developers would develop for Glide and in a few cases, RRedline and then D3D. They didn't limit themselves to only one API because they knew that not one hardware was totally dominant and so they didn't want to isolate people.
Eventually D3D became standard and everyone supported it, so they only had to develop for that, but in the early days this wasn't the case. Just as they would develop for multiple APIs, so console software developers will develop for both systems. If they don't, they will end up isolating millions of people. Not a smart business move.
-Dave
Unfortunately its not as simple as that. They can co-exist but not in the same sense as other products like TVs or mp3 players etc. There are 2 main participators, that produce differentiated products, which products involve other industries in them which are fragmented and varied.
The console gaming industry specifically also faces continuous increase in development costs and on top of that there are also the hardware costs.
Profitability is taking shrinking pressures especially of the main participators like Sony and MS who have to update all sorts of things like hardware, libraries, and other features every 5 years. They basically start all over from the beginning. A single mistake may prove fatal for the future of their product. And usually the more succesful they are with the current product the better the chances for the future of not going under the carpet.
So every time they release the next product the competition is extremely fierce trying to regenerate sales and gain as much market share as possible to ensure their security in an otherwise complicated industry.
Developers may have the ability to move from one support to the other, but the hardware producers cant get them back once they lose them. They move on a very thin line.
So in case Sony faces the challenges lets say MS faced with the XBOX someone may think no problem Sony will be ok. But thats a false observation. There are more chances they will go downhill in the future. Its as false as someone thinking low sales for Nintendo mean it failed.
So if you ask me who lost in the previous gen, well, the loser is Sega with the DC. It started great, it had superb games but died.
Nintendo and XBOX are either winners either losers according to how you see things. If you judge the XBOX as a whole it did great. MS managed to build a strong brand name due to their strong financial power. They steadilly also built a very interesting library of games which are bound for the 360 and previous owners will seek for them. No one else would have been able to enter the market and manage to persistently keep alive their product until it turned into a beast.
On the other hand if it wasnt for MS ability to fund a non-profitable, initially bad performing product it would have sunk.
Nintendo did the "worst" of all the three. Well, kind of. They managed to make profit despite that they sold even less than MS. And they are lucky that they are selling a product thats not competing the big two. If they were trying to compete them directly, despite last years profit, their performance in last gen simply didnt build the right conditions.
The only clear winner last gen was Sony. They succedded with the PS2 in both relative and absolute numbers like profit, market share and user base, they built the right conditions to make PS3 succesful. Now if they manage to exploit them well enough to ensure their current and future security is left to be seen.
Btw: by the time I am writing this post I am dizzy and lack concentration. So if I dont make sense or something seems strange in my post forgive me
