Y'know, I see a lot of people saying "it's going to be the downfall for Sony" or, "Sony's doomed!" or, "They've dug their own grave!", but people are just looking at the PS3: In truth, the PS2 is actually outselling the 360 and PS3 (cannibalism!), and is still the 2nd or 3rd best selling system in North America. That's what Reggie said at Nintendo's media summit '07. I guess Sony has the good 'ol PS2 to lean on if it's PS3 breathern fails. In that sense, Sony isn't entirely failing at the home console market.
The letter on Nintendo's website was pretty corny. I'm, c'mon Nintendo. Could you be anymore pompous? The tables could turn at any moment...