apropos

Microsoft Slashes Xbox Prices to Capture Market Share from Sony

Historically, game consoles only come in one model. In this generation, both Sony and Microsoft have different models of their consoles simultaneously making such comparisons irrelevant.

Why Microsoft's XBox 360 Will Outsell Nintendo's Wii

Why I think yu are off the mark:
1. The $199 360 model is the "gimped" model. It has no hard drive to make good use of Live (a point in your argument) to make very good use of the service.
2. Sony is making losses in the hardware, yes. But the PS3 software sales now offset the losses in hardware (search for recent interview given by Stringer). PS3 and 360 capabilities are similar in terms of gaming (plus/minus online offerings). As an entertainment hub, PS3 offers more with its Blu-ray playback capabilities. 360 doesn't have built-in wifi. And the Arcade model (the now $199 model) does not come with a hard drive.
3. People who graduate from playing Wii will not necessarily buy a 360 Arcade model to get more serious gaming. They can very well migrate to a DS or PSP, or one of the non-Arcade 360 (which is above the magic $199 price point), or, yes, a PS3.
4. 360 does not have the best catalogue of "casual" games. It has a lot of games targetted to hardcore gamers, games that could put off the target Wii audience (in general). Additionally, Wii owners who'd buy a 360 won't necessarily be buying games at the same rate as existing 360 users -- because they are not hardcore gamers!
5. Combining the CPU and GPU in a single chip argument - true for the other consoles. And guess what, Blu-ray drive will also come down in price as mor people upgrade their HDTV. Don't forget the cutoff date of February 2009 in the US to transition to digita TV. Yes, Wii may have less audience, but PS3 has the best propect of the 3 to benefit from ths transition. As for builing a single chip into a HDTV -- dream on. Sony has the best chance to do this and they won't. HDTVs are way more expensive than gaming console. Having a TV with built-in console gaming capability will make the TV obsolete way much faster. Who would want to buy a new TV every 5 years (and let's not get into the RROD discussion)?
6. The Xbox Live argument only holds true for hardcore gamers. For your average Joe, being able to buy a game online is suffficient. We may need to wait 1 or 2 more generations before online capabilities to be a deciding buying factor to the masses. I also question whether the 75% of potential purchasers (those only willing to buy a console at $199 or less) will be willing pay regular subscription fee.
7. 360 is still not a viable business in Japan. One week of good sales doesn't change the fact that the 360 is a failure in Japan. Declaring a turnaround is just utter fantasy!