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.

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.

The graphics capability of the PS3 is becoming more apparent as first- and third-party titles begin to show off more of the system’s power, says Steinberg:

“I think that we’re seeing, graphically, PS3 games starting to create some distance.  Some of the other competitors are going to feel that they’re getting long in the tooth, looking quite dated, because they haven’t created that ten-year vision from a horsepower standpoint.”

And indeed, games like Metal Gear Solid 4 and Gran Turismo 5: Prologue are starting to widen the gap in the appearance of the systems, and give the PS3 more unique titles that would make it a worthwhile system.  (We’re still curious to see the difference between the PS3 and Xbox 360 versions of Final Fantasy XIII.)

Steinberg went on to deny claims that they’re developing a Wii-like controller, and re-affirmed their core market: gamers.

“…as a brand, Nintendo’s got their thing, and we’re not trying to get the senior citizen group to get into gaming.”

The console wars continue…

Sony hasn’t commented on the problems, but they’ve reportedly pulled the version update off of their servers to prevent problems for those who haven’t updated yet.

The firmware update was meant to bring several updates to the PS3 console and online system, including PS3 Trophies.

Most notably among them is the addition of Trophies, a new system that basically imitates the Xbox 360′s Achievement system.  Players can earn permanent awards for completing in-game challenges that are linked to their profiles.

A handful of publishers have stepped up to confirm that they’ll be incorporating trophies into their games.  Burnout Paradise and Uncharted: Drake’s Fortune will both get trophies added to them in future updates.

The Xbox 360 achievement and gamerscore system has proven a great success for Microsoft.  Some players have gone to great lengths to improve their Xbox gamertag’s status, even playing games they wouldn’t have otherwise played.  King Kong is a classic example of this — the game received low reviews but has been played by an unusually high number of gamers because of the ease of earning achievements.  [See more ways to earn easy achievements and gamerscore.]

Although not all PS3 games will support Trophies, at least at first, this is the next step in the PS3′s gradual attempt to match the Xbox 360′s success in its online network.