I got better plan.

They could have put PS2 into new ultra slim box, bundle it with eyetoy and sell new generation of revolutionary motion based console for everyone for 200+$.

If they felt generous they could have even overclock cpu and gpu inside slightly.

I'm not sure if your stealth will work but excellent effort.

Except for the fact that Blu-ray profits will far outstrip Sony games division profits in the end, I would totally agree. On top of that, MS is not Sony's only competition, so "beating the 360" is at most half, if that, the issue at hand.

The Blu-ray victory was/is everything. You can't forget it, because the PS3 was the key to victory. Blu-ray will eventually amount to billions in profit -- something the games division alone could probably never have achieved, especially in lieu of an advancing Wii.

On top of that, the PS3 is doing quite well these days. I think Sony had unusually accurate foresight with the PS3 plan, or they adapted and fought the "console war" better than the competition was able to.

sony new there fans would come and support them no matter wht. but im afraid this point is true . all of the facts are there. but the underliying problem would have been releasing the ps3 in a gen that would have been 4yrs. old when the ps3 would have been launched for 349.99 with 4 usb ports, backwards compatablitiy, nad everything else the took out. and i truly don't think the ps3 helped when the hd dvd war. blue ray would have won anyway becaue the mayjor studios were already behind it and it provided for more store age space on a sigle disc.but that could have also been a good thing. if the ps3 would have been launched in 2010 with some of the biggest games to date they would have rewrote the console wars and they we be saling in a time period that would have had no relavince to the curent gen.

good point. no body wants that! (hahaha)

NO ALL PS3 GAMES LOOK BEETER THEN ALL 360 GAMES.

SONY WAS THE SAME THING NINTEDO WS A VICTOM OF THERE OWN SUC

...Gamers expectations always increase. What new consoles do is raise these expectations by increasing the performance of the games, whether it's just graphics, or more the gameplay (think shattered horizon).
If the PS3 was never launched, Sony would not be in control of the HD media format, and 360 sales would be much larger then they are today as gamers would have played the likes of GRAW and Oblivion and realised that those games are simply superior to there PS2 counterparts.

Saying PS2 graphics are good enough is utter bull. What you fail to realise is that graphics are a fundamental part to getting good gameplay. Take the GT series. This game tries to be an imitation of real life , therefore better graphics help with immersion. This is true for any game trying to be realistic. Then take FPS' - better graphics allow most to work better due to the nature of the genre. If graphics are poor, you cannot distinguish between a guy and a bush due to draw distance. Yet if graphics are better, you can. I doubt that an intended part of the game is to make things look indistinguishable at a distance due to low res textures, poor lighting etc.

You are also utterly ignoring the PC market. Whether you like to admit it or not, this market impacts consoles and therefore has to be considered when debating a consoles success, hypothetical or not.
ATI and Nvidia would have hardly stopped making GPU's and pushing graphical boundaries because the PS2 was still popular. Graphics on all gaming platforms tend to move together, and because of the point above about graphics can mean better gameplay, gamers would demand better than ps2 graphics.
Plus you also ignore all the other parts of consoles. The problem with the PS2 was it was maxed out. Games like San Andreas showed that the PS2 was struggling to keep up with devs ideas and this resulted in problems like slow loading trees, large barren maps etc.

You need to realise that gamers expectations are always on the increase. The PS2 was not able to fulfil this role, nor would have been able to, for a full 10 years, because simply put, the 360 could offer better games. Whether you like to admit it or not, the truth of the matter is that better hardware allows games to be better.

Plus you ignore the PS2's nonexistant online capabilities, wired pads, tiny memory cards etc.
To be honest I think you need to play for a year on the 360 and PS3, then hit up your PS2 and realise how much better this gen is to last.

If they did that the dreamcast would have raped the shit out of sony and sega would still be around.

Well I'm glad this didn't happen because I get to enjoy my Gears of War, COD, Mass Effect, etc. Games that aren't possible on the PS2 obviously.
What is the point of this thread? If this had happened we wouldn't have awesome games coming out month trying to outdo each other in scale, graphics, and gameplay. Instead we'd be stuck with games the PS2 can handle. Games such as a less impressive GOWIII, Final Fantasy 13 (same crappy story worse graphics) and more.
Personally I think Sony would be dead in the water if they stuck with the PS2. Eventually we all like technological upgrades and if they waited to release the PS3 a couple years down the road I think the 360 would have had an even bigger lead.