Cammie Dunaway, who heads up marketing at Nintendo of America, told Gamespot in an interview, “Even though our installed base it, at this point, 5 million households larger than the PS2 was at the same point in its lifecycle, [The Nintendo Wii] still has a lot of room to grow.”

Despite this affirmation, there are rumours that new hardware from Nintendo is expected to appear at E3 this spring, possibly in the form of a Nintendo DS follow-up.

Meanwhile, Sony says it’s in no rush to develop a PlayStation 4 anytime soon. Their reasoning: the PS3 has yet to meet its potential.

“I can’t even imagine what can be done technically beyond the PlayStation 3 in the near future,” said Jack Tretton, CEO of Sony Computer Entertainment’s American division. “A question I often get is when we are going to see PlayStation 4. When somebody can craft the technology that exceeds what were able to do on the PS3, but we are still just starting to harness it.”

Early in this generation, all three game console companies were quick to say that they expect this round to have a much longer life-cycle than recent generations, which only lasted about five years.

In fact, during the week of the launch, which occured December 17, Sony sold over 240,000 PlayStation 3 units.

Final Fantasy XIII will be released in other territories on March 9, 2010, but in Japan the game remains a PS3-exclusive. Final Fantasy game launches are always big news in Japan, and undoubtedly Japanese consumers are snatching up Sony’s console in order to play the new game.

Adding up its second-quarter results, Sony reports 3.2 million sales, a 1.1 million increase over the same quarter a year earlier. The same period also saw a signficant increase in game sales for the PS3 console.

Meanwhile, Sony’s little-engine-that-could, the PlayStation 2, is finally showing signs of decline. The system has been selling comparably to the PS3, as well as other current-generation competitors, the Xbox 360 and Nintendo Wii. Now, the PS2 has declined to 1.9 million in sales with only about half of the total games sold compared to the previous year.

The PSP also had a bit of a decline, dropping from 3.2 million to 3 million in sales, though game sales are up.

Sony bet heavily on the long-term adoption of its technically-superior PS3 console when it realased the device in November 2006. The console had to compete with the Xbox 360, which was out a year earlier, and Nintendo Wii–both of which had lower price-tags and comparable, or arguably superior, game libraries.

Adoption of the PS3 has been slower than Sony expected, but if sales continue to rise there’s hope for the PS3 yet.

The announcement comes alongside news that Sony plans to take on Latin America by releasing its PS3, PS2 and PSP systems there.

The company’s phased approach involves eventual expansion to thirteen countries in the area, beginning with Argentina, Chile, Columbia and Peru in the first phase.  Sony also plans to set up a localized PlayStation Network in the area.

Ian Jackson, VP of sales at SCEA, has high hopes for the region.  “Long-term it has a very good opportunity to be bigger for SCEA than the Canadian market was,” he says.

The bundle includes the branded 160 GB PS3, as well as the new Final Fantasy VII: Advent Children Complete movie set.  The Advent Children Complete set also contians a PS3 demo of the upcoming Final Fantasy XIII.

The Final Fantasy PS3 bundle goes on sale on April 16, 2009 in Japan for 49,980 yen, about $550 U.S.  There are no known plans to release the bundle outside of Japan.  The Advent Children Complete set goes on sale the same day, also containing the FF13 demo.

Speaking with Kotaku, an Aaron Greenberg, an Xbox 360 product manager, says that he isn’t impressed with the service:

“What Home to me feels like is Second Life for hardcore gamers … It doesn’t feel like it broadens the experience and invites people in. When they unveiled it, it seemed innovative. I think what’s happened is now here we are a couple of years later and we feel beyond that … It feels like 2005 tech in 2008″

One of the biggest points that PlayStation Home tries to make is that it’s a free service, while Xbox Live Gold members have to pay in order to play their games online.  Greenberg insists, though, that no price drops are in Xbox Live’s near future, and that the cost of Live is justified by the service:

“I think we have seen people are willing to pay for the premium experience. When they compare Live, even to Home, there is still a huge gap.”

Greenberg also insists that Xbox Live is prepared for the holidays.  The service, which experienced difficulties last Christmas after an unexpected number of people went online, has reportedly been improved since.  “We are well prepared for the type of growth we expect this holiday,” says Greenberg.

The announcement comes the day before Microsoft releases its highly-anticipated Live Experience to Xbox 360 users.  The new system will improve interaction among players on the network, introduce player avatars and revitalize the Xbox 360′s interface.  Sony is probably hoping to dispel the common conception that its PSN is inferior to Xbox Live, which seems to be preferred by most regular gamers.

Microsoft is very excited about the new Live Experience, insisting that it represents that future of home entertainment content. “With the New Xbox Experience we will reach the next generation of Xbox owners, 25 million and beyond.” said Don Mattrick, senior VP at Microsoft. “We are at a watershed moment, backed by the largest entertainment brands, with an incredible line up of entertainment unmatched in any industry.”

As Mattrick indicated, Microsoft is approaching 25 million Xbox 360 consoles sold.  Compare that to 35 million sales for the Nintendo Wii, and 17 million for the PS3.  Although the Wii is reaching a wider audience, Microsoft is confident that it can maintain its lead over the PS3 indefinitely.

Needless to say, Microsoft has high hopes for its updates, but insists that the new Live Experience is just the beginning.  Xbox 360 players can judge for themselves tomorrow.  The new Xbox Live Experience update will begin downloading automatically on Wednesday when players sign into Xbox Live.

Aaron Greenberg, product manager at Microsoft, tells Kotaku, “we feel confident that we’ll outsell the PS3 this holiday season in North America and in Europe. We’ll do it on a global scale.”

The Xbox 360 is now the cheapest console on the market.  Microsoft also points out that its console sees a higher number of games sold per console than the others.

According to Greenberg, the company is also taking measures to ensure the stability of the Xbox Live service, which suffered downtime last holiday season after an “unexpected” surge of new users joined.

As Patrick Seybold of SCEA explains to Edge, Sony believes that its lineup, not a lowered price, will push the PS3 ahead this holiday season.

“We aren’t making any price moves this holiday season. In my opinion, we have the best line up of any PlayStation generation going into this holiday and consumers will be very receptive to it … With PS3 titles for this including Resistance 2, LittleBigPlanet, SOCOM, MotorStorm: Pacific Rift to name but a few of our multiple exclusives, combined with PlayStation Home and increasing multimedia features for the hardware, we expect to have continued momentum going into and beyond this holiday season.”

Price has always been a major sore point among consumers when considering the PlayStation 3, which is the most technically sophisticated of the current console generation.  With last month’s Xbox 360 price drop and the already-lower price of the Nintendo Wii, analysts expected Sony to push the PS3′s price down for the holidays.

Sony will have to hope that consumers will be as impressed with its lineup as they expect.

“In the past, in the eighties and nineties, that was a major issue,” he explains. “I remember the big ‘Mario vs. Sonic’ debates. What we see today is that the influence of exclusive titles on the sales curves becomes ever smaller.”

“Given the production costs of the games, it is hardly possible for developers to commit itself exclusively to someone,” continues Schneider-Johne.  He illustrates how the console developers have a business incentive to limit themselves, but that third-party developers “like Electronic Arts or Activision can have a business model of rarely developing for a console exclusively. Therefore, the exclusive title is a little less important.”

And indeed, this is becoming more and more apparent as big-name titles abandon exclusivity.  Until Grand Theft Auto IV, the GTA series came out on PlayStation consoles first, and was only later ported to the Xbox and Windows PC platforms.  Final Fantasy XIII was set to be a PlayStation 3 exclusive, but Square Enix has since decided to “port” the game to the Xbox 360, even delaying the release to do so (although its sister title, Final Fantasy Versus XIII, is still slated as a PS3-exclusive).