Honestly, it's not horribly priced now. Consider that Microsoft charges $100 for WiFi; If I wanted an XBox 360 with WiFi, it would cost me $500 ($400 for Premium, $100 for WiFi).
I don't see why people make such a big deal out of wifi with gaming.
I was gaming for years on a PC before getting my Mac and wireless was always too unstable and too slow for action games of any kind.
Theres too many variables that affect that quality of a wireless signal. The PS3 (and Xbox360) are stuck with 802.11g. Just a single wall between the router and will cut the connection speed down significantly. Then theres also interference problems. Interference from other electronics, the TV the console is connected to, any other components sitting in the general area, cordless phones, microwaves, cellphones, etc.
Theres a thousand things that can affect the signal quality and lead to packet loss or much higher latency.
I know my ping times always dropped by about half when I used a wired connection versus wireless. Sometimes my wireless connection would give me ping times that made me wonder if I was still using a dialup modem.
Want to stream high definition video over 802.11g? Good luck! Even though it has a claimed throughput of 54Mbps, the real world performance is FAR less than that. You will be extremely lucky if you can play an HD video without any dropped frames or pauses.
Even streaming a DVD video at around 5Mbps over 802.11g can result in dropped frames and pauses if theres a wall or two in between the router and the console.
802.11g is perfectly fine for web browsing and chatting, maybe downloading a song or two from iTunes.
But for anything that involves the "need for speed" so to speak, 802.11g fails miserably.
So the fact that the Xbox360 has no wireless is not a bad thing at all.
but the PS3 also has a Blu-ray player (which are normally around $500 anyway)
Which is of no use to many people. Unlike the transition from VHS to DVD, where most people only had a very small number of VHS tapes due to rental pricing, people actually own libraries of DVDs. There are countless people out there like me who have spent thousands of dollars on building a DVD library. Even those with a small library, like 20-30 movies, are not about to just dump their investment and move on to a new format. There are people out there, myself included, who own more DVDs than there are blu-ray discs available. An upscaling DVD player is a much better investment than a blu-ray player because it will breathe new life into all of your "old" discs and it will bring those DVDs up to almost the same quality as blu-ray.
Realistically, why should anybody go and rebuy a movie on HD-DVD or blu-ray when it will only be about 20% better, max, than that same movie on a much cheaper upscaling DVD player?
40 GB more hard drive space
Which is useful for what? Both systems support USB mass storage, and the Xbox360 will even play your music directly off your iPod WHILE you play games! Any game! Not just some.
Do some google searching and you'll quickly find out that the VGA out on the Xbox360, thanks to recent updates, beats the HDMI out on the PS3 and the Xbox360 Elite
And how is this useful? How many times will you, or anybody you know, say "HEY! I have some great pictures I just took on my camera! let me pull out the memory card and put in the PS3 so we can look!"? How often will that happen? And, again, both systems support USB mass storage. 4GB flash drives are cheaper than 4GB SD and CF cards. The Xbox360 will also hook up to any digital camera and display the pics on the TV screen. So again, how is the memory card reader useful?
For headsets. The vast majority of bluetooth mice and keyboards do not work with the PS3 and the games have no keyboard and mouse support anyway. So this is good only for headsets. But then you have the issues of having to pair with the headsets, sometimes every time you want to use the headset. Thats more trouble than its worth. Especially when the Xbox360 has a neat little headset that connects directly to the controller.
And do what with it exactly? For multimedia, the PS3's built in UI offers more functionality than Linux.
Are you going to run desktop applications on your PS3? Don't forget that the PS3 only has 256MB of main system memory (plus 256MB of video memory). Good luck even running OpenOffice along with a decent window manager like Gnome or KDE.
A $500 PS3 configuration gives you WAY more than a $500 XBox 360 configuration (assuming Premium w/WiFi), and if you compare the 360 Elite to the PS3, the Elite has the bigger hard drive but the PS3 has WiFi, Blu-ray, Bluetooth, and is overall a way better deal.
Again, blu-ray means nothing. The games would be exactly the same on DVD-9. Bluetooth is only good for headsets and causes more headaches for people than its worth, and wifi is not something you want to use for gaming or streaming media.
A $399 or $479 Xbox360 gets you a lot more out of the box.
The $399 Xbox360 comes with a headset, component cable, and ethernet cable. The $479 Xbox360 throws in an HDMI cable along with the other accessories. The PS3 comes with what? RCA cables so I can hook it up to my 20 year old TV okay?
Unfortunately for Sony, most people look at the up-front cost and don't add up the cost of adding WiFi and the extras.
Such as having to buy component or HDMI cables for the PS3, a headset for the PS3 and other things?
The Xbox360 comes with everything you need out of the box to get up and playing games in HD immediately. The PS3 requires you to buy extra cables and accessories.
You also mention playing PS2 games later in your post. You even have to buy an adapter for that on the PS3 to get your memory card saves going.
Something the Xbox360 has as well. The vast majority of the original Xbox library is up and running now.
And honestly, how long have you been playing videogames? My first system was an original Atari. I owned NIntendo systems all the way up to the N64, and I still have my original Playstation.
Do you know how often I go back and play old games? Almost never. When the PS2 came out, I had no reason to go back and play say... Spyro again when I could play Ratchet and Clank. And now with the Xbox360, why would I want to go back and play Gran Turismo 3 when I could play Forza 2?
the ability to upscale PS2 games
Something the Xbox360 has had ever since release. Oh and the Xbox360 can even upscale its own games. For example, a 720p game can be upscaled to 1080i if you only have a 1080i TV. Let me know when the PS3 can finally do that
Blu-ray and HD-DVD are the current SACD and DVD-Audio and both are heading down the same path that SACD and DVD-Audio did. People are not going to up and replace their DVD libraries, especially not those who have spent thousands of dollars building their library. Blu-ray doesn't offer the jump in quality over upscaled DVD that DVD did over VHS, and unlike the VHS days, people actually have movie libraries now.
Also known as "microtransaction hell". Let's not forget that, in a recent interview, higher ups from Sony made it VERY clear that the Playstation Network will not always be free and that many things in Playstation Home will require microtransactions to use.
Bigger than 120GB?
The hard drive size is pretty irrelevant considering that both support USB mass storage. The Xbox360 makes it super easy to stream HD media over wired network from a Mac or Windows system. The Xbox360 can play all of my music off of my iPod while I play any game. Why would I need a few more gigabytes?
Again, useless. The PS3 offers more multimedia capabilities out of the box and trying to use desktop applications in Linux with only 256MB of RAM is insanity.
Too slow, too unstable, too unreliable. Want to stream media? Forget it. Want to play an action packed game like Unreal Tournament 3? Better hope theres not too many walls or electronics in range of your wireless network.
The fact of the matter is that I can go buy an Xbox360 Premium right now, and a game, and have EVERYTHING I need to be playing HD games and communicating with people online within seconds of pulling the system out of the box. Even though the PS3 costs $499, it does not come with the cables you need to get HD video or a headset.
Infact, for what it costs to get good component or HDMI cables, and a headset, I could get the Xbox360 Premium and two games while the person buying the PS3 will be spending more on just the system plus needed accessories.
$499 is still too expensive. It is still a game machine no matter what Sony says. $499 to play games is outrageous. Especially when the system doesn't even come with the accessories you need to get the advertised functionality out of it, like HD graphics. You're spending $500 on just the console and you're getting an RCA cable. Yeah, thats a great deal.
I'm sorry, but Sony blew it with the PS3. I was a huge Playstation fan for the last 10 years. But the instant they announced the price at E3 last year, after many arrogant statements like "We want people to think they will work extra hours for one", they killed off all of the hype and anything the system might have had going for it.
Unless they get a system at $399 out before GTA4 is released, this generation affectively belongs to Microsoft because of Sony's own arrogance killing themselves. They seemed to have forgotten that people want to play GAMES and that the Playstation3 is a game machine above anything else. And that no amount of brand recognition can overcome a high price tag when the system is not worth it.