Three machines are in shops competing for the same shelf space and the same Christmas money, and they are not in the same business. This gets discussed as a three-way race, which makes about as much sense as ranking a taxi firm against a car manufacturer because both involve cars.
Nintendo sells the Wii for a profit. Not a small loss recovered later, an actual profit, on the day, on the hardware. The machine costs little to build because it is roughly a GameCube running faster with a motion controller attached, and the controller is clever rather than expensive. Every unit through a till is money in, and every game sold on top of that is more money in. It is a straightforward manufacturing business and the accounts are legible.
Microsoft loses money on each 360 and expects to. The recovery comes from the licence on every disc and, more importantly, from the subscription to play online. That subscription is the actual product. It bills monthly, it costs almost nothing to serve once the infrastructure exists, and it makes leaving expensive in a way that has nothing to do with the plastic box. This is a services business with a loss-leading appliance in front of it, and the hardware charge Microsoft took over failing consoles this summer is the cost of getting that appliance wrong.
Sony is doing something else again, and I wrote about the mechanism back in February. The PS3 loses a great deal per unit, and a large part of that loss is a Blu-ray drive fitted to every machine regardless of whether the buyer wants one. Sony is subsidising disc drives into homes to settle a format war, and charging the cost to the games division.
Which means the console with the highest price and the weakest sales is also the one whose strategy is closest to working, just not at anything the games press measures.
The scoreboard everyone publishes is units shipped. It tells you Nintendo is winning comfortably, which is true and which understates it, because Nintendo is winning on units while also being the only one of the three making money on each one.
It tells you nothing useful about the other two, because units are the input to their strategies rather than the output. A 360 sold is a subscriber acquired. A PS3 sold is a drive placed.
My own view is that the subscription is the most durable of the three positions, because a monthly relationship survives a generation transition and a format does not. But it took a billion dollar hardware failure to nearly break it this year, which suggests the appliance still matters more than the services argument likes to admit.