Microsoft got a jump on its next-generation video game console competitors when it shipped the Xbox 360 in late 2005, but only now—over a year later—can we soberly evaluate each of the key systems and determine which offers the best value. Consumers can now choose between three modern video game systems: the Xbox 360, Sony's PlayStation 3, and Nintendo's Wii. As with the previous generation of consoles, each offers unique benefits and will appeal to certain kinds of users. But this time, the dynamics have changed dramatically, with each of the system makers taking its console into entirely new markets. Here's how the systems break down.

Xbox 360: The Most Versatile Console
In the previous generation, Microsoft's Xbox console was the favorite of hard-core gamers because it was the most muscular system, with broadband capabilities, an integrated hard drive, and other high-end specs. Now, Microsoft has forfeited the high end of the market to the PlayStation 3, although not by much. But no matter: Although the Xbox 360's graphics and sounds are about on par with what's available on the PlayStation 3, Microsoft makes up the gap in other, unexpected ways.

First, Microsoft's Xbox Live online service is dramatically more full-featured than Sony's weak PlayStation Network (PSN), although Sony could eventually make up the difference. (Microsoft's service can also be more expensive: If you want to deathmatch against other people online, you'll need to fork over $50 a year for the Gold version of Xbox Live.) Xbox Live offers downloadable game demos, Xbox Live Arcade games (typically $4 to $10 each) movie trailers, rentable TV show s and movies (some in HD), and other features. Best of all, Xbox Live is a completely connected experience. If you're playing, say, Gears of War online with your friends, and you see that another buddy has come online, you can invite him to join the fun. Conversely, he could see you in Gears and decide to invite you to chat, or play a different game. Unlike with PSN, each game doesn't exist in its own virtual silo.

To attract the types of customers who wouldn't necessarily be interested in a high-end video game console, Microsoft has also made a big push into casual gaming. You'll see lots of titles such as Zuma and Ms. Pac-Man available on Xbox Live Arcade, for example, and even family-oriented games such as Viva Piñata, which has proven to be a big hit with my daughter, who isn't particularly interested in video games.

The Xbox 360 also offers Media Center Extender functionality. So, if you've got a Windows XP Media Center 2005 or Windows Vista-based Media Center PC in your home, you can access all that live and recorded TV, video, music, and photo content from your Xbox 360, using a UI that perfectly duplicates the real thing. We're using an Xbox 360 in our den now, actually, and for the past two months, it's been my family's interface for the TV. It works extremely well, even with online services such as Movielink, which lets you rent and purchase digital versions of popular Hollywood movies. And if you don't have a Media Center PC, fear not: The Xbox 360 can also connect to any XP and Vista-based PC and stream music, photos, and videos. Got a portable device such as an Apple iPod? The Xbox 360 interfaces with those too.

If you're interested in next-generation DVD formats, Microsoft offers a $199 HD-DVD drive add-on for the 360. Keeping this device separate from the console necessitates a few trade-offs. On the positive front, the Xbox console itself is less expensive, so if you're not interested in HD-DVD now, you can forego that expense or opt-in in the future. On the negative side, because Microsoft bundles a standard DVD drive with its console, Xbox 360 games will never be able to access more than 8.5GB of data: You can't use the more voluminous HD-DVD for games because the drive is designed to play only movies.

Are there other downsides to the Xbox 360? You bet. The console is overly loud, particularly when you're playing a game or doing anything that accesses the DVD drive. This noise lessens the console's appeal as an all-in-one media device, because what you really want to hear is the content you're enjoying—not that little white jet engine under the TV. And the HD-DVD drive adds another level of unwelcome humming. There are also potential reliability issues. The original Xbox 360 I received in October 2005 died with the dreaded "red ring of death" in late 2006, and a unit I picked up for the den in December 2006 died earlier this month after no warning signs whatsoever. A quick look online reveals that many others have had similar problems. Color me concerned.

If you have a big library of original Xbox games, you should know that the Xbox 360's backward-compatibility capabilities are middling at best. Microsoft has only sporadically updated the console for compatibility over the past few years and will likely stop this work soon. That's no way to treat loyal customers.

PlayStation 3: For Hardcore Gamers and Spec Freaks
I've been waiting to get my hands on a PlayStation 3 since Sony allegedly released the machine in North America in November 2006. After a few months of shortages, I finally did. Today, the PlayStation 3 is generally available throughout many markets, and it will launch in Europe late this week.

If you absolutely must have the most powerful video game system on the planet, the PlayStation 3 is it. This console features better graphics and better sound than the Xbox 360, and if the console's first round of games is any indication, its game library will soon surpass that of the 360 from a quality perspective, as well. For the hundreds of millions of existing PlayStation and PlayStation 2 users out there, the PlayStation 3 Sixaxis controller will be welcome: It's virtually identical to the PlayStation 2 Dual Shock controller (but wireless, and minus the rumble feature).

The PlayStation 3, unlike the Xbox 360, is virtually silent, and that fact alone makes it very interesting for anyone looking for an uber-media device. The only problem is that the PlayStation 3's digital media capabilities are lacking (although evolving). Sony does offer its PSN, but as I noted above, it's not as full-featured as Microsoft's offering. On the plus side, it's absolutely free and will improve over time. Currently, you can purchase or download only a handful of PlayStation 3 (and, intriguingly, PlayStation Portable—PSP) games from the PlayStation Store, and you can plug in various USB-based storage devices to access media files. But there's no DVR solution such as Media Center, no networking with PCs, and no legally rentable or buyable movies and TV shows. Someday, perhaps.

Unlike the Xbox 360, the PlayStation 3 ships with a next-generation DVD drive—in this case, a Blu-ray model, and it's a winner (assuming you're utilizing a 720p or better HDTV). Sadly, Sony doesn't bundle the HDMI cable you'll need to access such a TV, which is curious given the high prices of the console ($500 to $600, depending on the version). Backward compatibility with previous-generation PlayStation and PlayStation 2 games, at least in the United States, is stellar. (I've heard that European PlayStation 3s might not be as good because of the lack of a compatibility chip in those models.)

Until Sony lowers its price, the PlayStation 3 will see limited success. But as this generation of consoles plays out over the next few years, I fully expect the PlayStation 3 to meet or exceed the quality of games offered on the Xbox 360. The only question is whether Sony can keep up in other areas.

Wii: For the Kiddie Crowd
Some people are going to find offense with my assessment of the Nintendo Wii, which has been widely cheered for foregoing high-end specs and sticking to the fun factor. And sure enough, the Wii is an innovative and cute little console that eschews high-end graphics features, along with the associated price of such technology. There's just one problem: For all its over-the-top cuteness, the Wii is a one-trick pony, and it fails to deliver on the all-in-one entertainment experiences that the Xbox 360 delivers in spades and the PlayStation 3 promises for the future.

Here's what you get: The Wii is the smallest and quietest of the consoles. It's also the least graphically and sonically impressive, and although Nintendo says it makes up for these shortcomings with its unique game play features, these get tiring after a while. Unlike other consoles, the Wii ships with a game disc, of sorts, that includes a handful of sports mini-games that work with the system's unique Wii Remote wireless controller, which looks more like a TV remote than a typical video game controller. The trick behind this controller, and its companion Nunchuk attachment, is that it features 3D motion detection, so when you need to swing a bat in a baseball game, whack a tennis ball, or perform other similar moves, you literally move the controller around as you would in real life. And sure enough, the first time you play with the Wii Remote, it's exhilarating. Credit Nintendo for coming up with something truly innovative.

The problems creep in about 30 minutes into this exercise. The Wii Remote will appeal to very young kids, college students, and—in a somewhat creepy way—adults hosting alcohol-laden social events, the novelty of the controller system quickly wears off. Even my kids, ages 5 and 8, tired of the Wii very quickly, but they go back to the Xbox 360 and PlayStation 3 again and again.

Here's a more concrete example. Consider a game such as Call of Duty 3, which is available on all three platforms. On the Xbox 360 and PlayStation 3, Call of Duty 3 is a graphical champion and offers stunning single-player and multiplayer options. And Activision, the game's maker, has already shipped downloadable levels to extend online play. On the Wii, Call of Duty 3 is grainy and unimpressive, and because of the limitations of the device, only the single-player campaign is available. And don't get me started on its use of the Nunchuk to throw in-game grenades. It's cute the first time, but it gets old quick.

More problematic: The Wii can't even play standard DVD movies, let alone next-generation DVD formats such as HD-DVD or Blu-ray, and there's no DVR functionality at all, so the device is useful for only games. You're going to have to keep your existing devices around.

In short, I'm not all that impressed with the Wii, and although I respect Nintendo for thinking differently and trying to make the device more about game play than raw specifications, the company has also succeeded in making something that is so singularly uninteresting that it's an also-ran in my book—and certainly with my own family. Tellingly, it's the only next-generation console we're going to get rid of.

What to Buy?
As I write this, I feel that the Xbox 360 remains the console to beat. It's the most versatile, and it offers a graphics experience that's close to what you'll find on the PlayStation 3. That said, I do have some concerns about the Xbox 360's reliability, so I'm going to recommend something I never do: Buy the console locally and purchase the in-store warranty so that you can replace it at any time free of charge.

If you absolutely must have the best game experience, the PlayStation 3 should ultimately win out, especially when developers begin to figure out how to unlock the console's most impressive capabilities. A year from now, I expect PlayStation 3 games to absolutely blow away anything available on the 360.

As for the Wii, I'm going to have to disagree with the consensus and call it as I see it: Unless you have very young kids, skip this console. The Wii is a novelty console that doesn't offer much staying power. Either the Xbox 360 or PlayStation 3 would be a better choice for almost anyone.