There's no doubt that the PS3 business is starting to pick up this holiday season, especially since the introduction of the 40GB $399 model. With sales on the rise apparently Sony Chief Executive Howard Stringer is feeling his gusto too. According to Guardian Unlimited, he recently said, "I'm happy the Wii seems to be running a bit short of hardware. The PlayStation 3 will come into its own because its [high-end games] are infinitely more fun, demanding and exciting. The question people quite rightly asked was if the PS3 was going to get through this early cycle. I feel much more confident about that now."

For much of the PS3's first year, the console was mired in negativity from gamers and industry pundits who constantly pointed to the platform's high price and lack of "AAA" titles. Stringer feels the tide has turned. "I'm glad that the last few weeks have generated excitement about PlayStation 3. Everyone's stopped talking about it the way they were six months ago," he said.

While the Wii continues to outsell the competition in the U.S., the PS3 for the first time outsold Nintendo's console in Japan during November. Sony sold 183,217 PS3s compared to 159,193 Wiis, according to Famitsu publisher Enterbrain.

Even with the uptick in sales, Stringer acknowledged, "We've some catching up to do, but at least we have the opportunity to connect the PS3 with the PlayStation Portable and beyond." Indeed, the PlayStation Network will ultimately prove to be a key element of Sony's success or failure.

Analysts are more optimistic now as well. "Things do look a lot better than they did 12 months ago," said Hiroshi Kamide of KBC Securities. "My feeling is that they will continue to have a better time of it, but there is still a mountain to climb."