I think they can keep blu-ray, as they wanted to make money of the right's of blu-ray.
But everything else should be optimized with the best price to performance in mind.
Using a cheaper and easier to develop CPU/ram/gpu.
Also try to cut the price as much as possible to 399 or 449.
I don't remember how they marketed the ps3, but I think they should have a ps3 in the gaming section and ps3 at the home entertainment section of anything big box retailer.
Since Sony will make money of blu-ray digital rights, and software of gaming. They can succeed with both markets. People that want a blu-ray in 2006 should think of the ps3. It was the best blu-ray player at that time too. I think Sony needed to segmented its marketing strategy to address those 2 different markets.
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