I don't think this is absolutely true, but certainly more so than in historic console races. Pretty much all products have some overlap: even GTA IV was said to bite into Iron Man's earnings, for example, and those products aren't even in the same sector of the entertainment industry.
Regardless of how much overlap in demographics there is for these devices (that's a 20 page thread in itself), I think one should note that people can't have their cake and eat it too. Many people will site Nintendo's blue ocean strategy (which is brilliant, and is working), but then those same people will turn around and insist the Wii is competing with the PS360. You can't have it both ways -- the whole point of the blue ocean strategy is to distance yourself from your competitors and open up new markets, and if this strategy is working, you can't turn around and insist that they're all in the same market, after all. One or the other.
Again, I personally think both are partially true: the blue ocean strategy is working to a good extent, but it certainly isn't absolute. The Wii and PS360 are in the same market to a degree, but also partly not. It's a gray area that would, again, require a 20+ page thread to really discuss properly, and frankly, even then, I'm not sure we have the demographic information necessary to reach solid conclusions.
