I agree that Nintendo did not cause Sony's problems. Some of Sony's ps3 problems came from a poor rollout and some bad customer relations. But Sony is in trouble with the ps3, they have had to push back the profitability date several times which means that division had to be supported by their other divisions. Unfortunately for Sony most of their divisions are having profitability problems. Partly because of the economy but also because they have not managed to have a product that dominated any market.
My point of comparison with the Wii was simply that people have a clear choice between systems with high resolution graphics and lower resolution graphics and they are going with the lower end model. And I agree that some of it is about the wiimote.

@Hitsch this idea has been promoted by Sun Micro since before the internet started. The big problem is internet stability. If your house and all your files are controlled by a server farm what happens when you loose internet connection?

And to put on my paranoid hat... who controls the servers? With google recording everything you do on the net and microsoft analyzing every file on your computer just think of the power that the people who controlled that info would have.

And if this technology pans out and they succeed at creating these virtual worlds what is the risk of brain washing? If they are worried about that with the technology we have now imagine what they will say if we can create a truly immerse virtual world? We will either have a new and impressive way of communicating or we will have the Matrix.