In an interview with Edge Magazine, Aaron Greenberg, Microsoft’s director of product management provided insight on why he thinks the Xbox 360 has dramatically outperformed Sony’s PlayStation 3:

“We’ve just taken a different strategy. Sony bet on the physical disc, and there are costs associated with that. The fact that we’re able to offer a console starting at $199 is a benefit of not being burdened with that cost. Being $100 cheaper is part of the reason why we’re nearly twice their installed base.”

This is fine conceptually, but Sony recently offered a new slim model of its PS3 for $299 and sales took off (up 30 percent year-over-year in February). The single biggest reason the PS3 has underperformed is the product wasn’t appropriately priced. It was outside consumers’ pricing expectations range (CPER).

In the same interview, Greenberg discusses downloading high-definition movies on the Xbox versus watching them on a Bluray on the PS3:

“For us, our bet was on digital distribution, that that was the future – the ability to do 1080p movies with no disc, no download required; we have the largest movie and TV library, the largest HD library of any console,” he continued. “Sure, there are trade-offs, but the convenience of pushing a button and watching a movie instantly is, we think, pretty appealing.”

Thing is, you can download movies on the PS3 as well. And watch Bluerays. It was the high price and the poor marketing that hurt the PS3 for years. Which is amazing because Sony enjoyed such a head-start in PlayStation evangelists before the Xbox 360 launched.