Eh? The majority of gamers couldnt care less about the online service, and certainly not enough to pay for it.
What MS have done is corner the hardcore market, and its those gamers who place a strong emphasis on Live!
Pachters predictions are based on what he thinks will happen at the time of year when console sales are high. During Q1 they are low.
To me, it seems like XBL is a pretty big deciding factor to many people. I can't tell you how many times I have heard people saying they are going to get a 360 over a PS3, mainly for XBL. Though I suppose such evidence is merely anecdotal.
I just do not see how the current sales trend, added to the 2008 game releases, and possible price cut correspond to an annual drop in sales. Whether or not the 360 is beat by the PS3 and Wii makes no difference, I find it highly improbable that the 360 will actually sell less than last year.
one said:Do you have sales data in EU? The OP mentions not only the US.
Another point is whether Gears of War 2 and GTA4 can match the demand of Halo 3. In addition, hardware sales are relatively affected by the competition. As you mention the lack of software / service hurt PS3 last year, but this year PS3 have several forthcoming big titles and online service improvements, not to mention Blu-ray.
You bring up a good point: there is no Halo this year. However, Halo 3 continues to sell at a steady pace, and as you pointed out, other blockbusters such as GoW2 and GTA4 are on the way. Add this to a $50 price drop on all models, and the console will not only have a bigger/more enticing library of blockbuster games, but also a much more attractive price point. A Pro for $299 would sell like hot cakes, especially if Microsoft packages in a game, and possibly upgrades the HDD to 60GB.