It's because the gaming world is an incredibly divided and not-exactly-smart one. When it was Sony versus Nintendo, there was just an absolute wreck. Nintendo w

It's because the gaming world is an incredibly divided and not-exactly-smart one. When it was Sony versus Nintendo, there was just an absolute wreck. Nintendo was incredibly closed about their system, and they focused on less mature gaming titles. Sony took everybody in, and that worked last generation. However, they never really had a vision. Microsoft made a smart decision, and turned the XBox into a media center. A lot of people got the XBox in liu of a DVD player. The 360 expanded on that a lot, and it really had a vision: when it entered alongside the GameCube, it crushed, because the GameCube had nothing to offer outside its niche. I think it's safe to say that: I was a GameCube owner, and I was happy for Viewtiful Joe and Melee, but it was incredibly weak as a competitor. In this generation, Sony showed that it had no idea of what made their original product good: the PlayStation 2 was cheaper than its competitors, and as such was able to amass a huge gaming library. Microsoft and Nintendo both had visions. Microsoft focused on online gaming, and Nintendo focused on casual gaming. They both succeeded. Sony assumed the competition was about making the prettiest box, no matter the cost. They made a system that was a luxury item: the other two made consumer products. Sony's paying for it now. I think that in a way, you could say that Microsoft basically used the same strategy they've always used. They made something to appeal to the everyday user - though in this case, "everyday user" meant "everyday gamer" rather than expanding to the casual markets - and they profited. I think that Sony could have easily stopped Microsoft, and made the XBox the last-place console, but they messed up in a big way. Nintendo took the lead in droves - I think it's safe to say they've gutted the two other companies, considering there's still a shortage of Wiis - and Sony went from first to last. Microsoft took over in the vacuum that got created.