Oh, the PS3 and 360 are definitely still different. They are just more similar to each other than the are the Wii in terms of TYPES OF GAMES offered.
If you want to play good FPS games, sports, racing, fighting games, do online gaming etc. you can buy EITHER a PS3 or a 360 and be happy with the game selection.
If you buy a Wii you'll be pretty much miserable.
And buy the same token if one wants a bunch of pick up and play games, simple games where they don't need to learn a lot of buttons etc. the Wii will fiill that need and they'd be pretty much miserable with a PS3 or 360.
So again, the PS3/360 OR Wii decision can be made on types of games alone.
Trying to decide between the PS3 and 360, types of ganes doesn't help much, and one has to look at specific titles, whether they want a blue ray player, which online service they prefer etc. etc.
So in that sense they compete more directly than they do with the Wii.
Price is a bit of a moot point now. PS3 is only $50 more now so that doesn't matter much, especially if one factors free online vs. $50 a year for live.
And also, the PS3/360 hardware is more similar to each other than to the Wii. Both are HD, both have real next gen graphics etc. etc.
So I really don't see how anyone can make a reasonable argument that the PS3 and 360 aren't more similar to each other than the are to the Wii. They're clearly much more similar both in hardware features and genres of games supported in their libraries.
They still have important differences, but they are more specific things like blue ray, different titles exclusive etc. rather than broad things like "real" games vs. casual gamers + nintendo titles, HD vs. non-HD etc. etc.
As for the sports car analogy. Maybe I should have went with Sedan (something like a Mazda 6) vs Minivan.
But my main point was just because products are in the same area that doesn't mean they all compete directly with each other. Large groups will only consider one or the other, thus they can be dealing with largely separate markets with some overlap. While others go for pretty much the same market and fight tooth and nail for the same peoples $$$.
As for the luxury items. The PS3/360 are not luxury items. Their game consoles aimed primarly at GAMERS. The Wii is a console aimed at Nintendo fans, casual gamers and non-gamers. Both are marketed clearly at such groups, such groups are distinct with some overlap, and that's why the Wii competes less directly than do the PS3/360 which appeals to, and is marketed to, the core gamer group.
Sorry this post is rambly and back and forth, but I'm
ing tired and off to bed!