The WSJ has a good article comparing the new Nintendo to the new Playstation system. You can read it here
The description of the two clearly shows that we have a heterogeneous product and we are no longer in "perfect competition," but rather "monopolistic competition."
"The PS3 includes a hard disk, a networking port, Wi-Fi wireless networking, and playback of DVDs and CDs. It produces high-definition video. In fact, the PS3 can also play a next-generation, high-definition movie disk, called Blu-ray...The Wii is a small, thin white box that costs just $250 and has much wimpier specs than the Sony. It does have Wi-Fi, but it lacks a hard disk, a networking port, and the ability to play DVDs or CDs, let alone Blu-ray disks. It cannot produce high-definition video. It has fewer ports and connectors."
It is also clear that the two machines are targeting two different types of "gamers"
"The Wii is for casual game players, including younger kids and older adults who find the complexity and finger skills required for the PlayStation and Xbox to be intimidating. Even adventure games and racing games on the Wii seem easier to get into than similar titles on the PS3."
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