Not that bad to hang with the PS2, as it's a great system.
They are coming with games on par with the Wii right now, but that will all change once Ninja Gaiden Sigma comes out
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Check the line-up of games coming out this summer/fall though. It's gonne be killer. Can't wait till MGS4.
Oh and the PS3 is doing much better than most people think. It's dominating the X360 in Japan and in Europe. Only in NA is the X360 doing better, but that is expected since it has been out longer and currently has better titles. The PS3 will surpass the X360 in overall worldwide sales before the end of the year I predict.
Oh, and the PS3 is not ugly! It's the sexiest looking system out of the 3 easily, while the X360 looks terrible. PS3 is also the best bang-for-buck in terms of hardware capability. The X360 only costs around $350 to manufacture, while the PS3 is still over $800. That will certainly come down when Cell and Blu-Ray become cheaper, but the overall quality of the parts is astounding.
I think the main problem with the PS3, is that it came out too soon. Sure, they couldn't afford to wait any longer, but they released developer kits far too late and made them far too expensive to expect any good games for a while. Sony also had a lot of bad rep due to Ken's ****y attitude at gaming conferences. Once Sony does a bit of damage control, they should be back on their feet.