Clearly, each system has unique benefits over the other, but what are they, and how should they affect your decision to buy one console over the other.
As a Playstation 3 owner I am constantly debating this with several of my friends who all own Xboxes, which brings me to the first point. Xbox is more widely used. Since the networks don't intermingle this gives Xbox owners a decided advantage since they will be more likely to be able to play with people they know.
Xbox owners can also play split screen mode with multiple users signed on simultaneously. While some PS3 games offer this function for offline play (or online play utilizing offline profiles) it generally does not allow you to sign on as two separate users in games like Resident Evil 5 (which was designed to be a two player cooperative game). Although you can still play two player split screen modes, trophies and progress cannot be shared between two profiles unless you manually copy the save game data and transfer it onto the other user name. I admit, I find this very frustrating as a PS3 owner.
PS3 owners have enjoyed higher definition graphics from the beginning. Even now, with XBox 360s updated to be capable of HD output, they are still a stage behind PS3 who recently updated to HD 1.4, capable of 3D output. In addition, most PS3 games are designed for HD output to begin with. A standard def Xbox game isn't going to magically be capable of HD output after the console is updated. As an owner of an HD TV, this was a big factor in my decision to purchase a PS3.
A PS3 is also a blu-ray player! As an owner of an HD TV, this was another big factor in my decision to purchase a PS3. With a high output home theater system system I was already in the market for a blu-ray player but wasn't ready to buy a player alone due to the cost, as well as the fact that I've only recently developed a respectable DVD collection and was reluctant to invest in a technology that might only have minor benefits over what I already had.
The final reason that I chose PS3 was more personal and biased, I must admit. In my youth I had a Sony Discman that I carried everywhere. From middle school, through high school, from one side of the country to the other, I took that dependable piece of electronics everywhere. I mistreated it, scuffed it all up, dropped it countless times. After several of years of misuse it would occasionally disassemble when dropped from 5 feet or more, the motor and laser popping out, the lid would fly off, the button covers worn off, and the batteries held in by tape after cracking the battery cover. I would just snap the pieces back together and it would always work. In fact, I still have this wonderful piece of technology years after graduation, and even though I don't use it because I have moved on to MP3 players, it still works, and it still never skips unless I deliberately rap it on the lid while playing. Even though this has nothing to do with the PS3, Sony has consistently delivered dependable and affordable products and when I was ready to invest the money into one of these two expensive consoles I wanted to go with a brand that I trusted.
I have had a PS3 for a year and a half now and I have not had a single problem with it. In contrast, my girlfriend has gone through five Xboxes over the last three years due to system failure, "the dreaded red ring of death".
In summation, if you want an affordable system strictly for gaming that may or may not have serious design flaws, buy an Xbox. If you want a slightly more expensive system capable of higher HD output and able to play blu-ray movies with a tried and true history of delivering the best electronic components in the industry, buy a Sony PS3.
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