It wasn't a shock to many when the PS3 failed so miserably during its first year. It was a bit of a shock, however, to see how amazing the Wii did – especially against the Xbox 360. The Wii managed to not only catch up to the 360 in terms of sales but eventually surpassed it, up to 15 million units depending on your sources.
Now as we go into 2008, all three consoles have had plenty of time to make themselves known to the world. Even though the Xbox 360 has slipped somewhat, Microsoft believes it is temporary and that 2008 will see the 360 get boosts in sales. They probably aren't swinging on Japan for this, as that is one market where it is doing terribly. They are, however, setting their sites on Europe and are planning to increase sales across several European countries.
How exactly they plan on doing that isn't clear. The console is already out; there's nothing more to wow gamers with, except perhaps new games. Interestingly, however, they see the PS3 as a bigger threat to them than the Wii – even though the PS3 has sold only half the number of consoles the 360 has. It will be interesting to see what Microsoft has in store for the 360 in 2008, especially with the willingness to adapt and update the console, something relatively new in the console world.