"Let's say for the moment that Sony decides to take Mr. Christensen's advice (despite indications to the contrary). In order to execute it will need to have hardware and software working closely together, and doing so in a way it has never done before. In fact, I'd posit that software development and usability should drive hardware design, not the other way around, which is traditionally the way it is done at Sony. "

Hasn't Nintendo been saying this for years?

It's one of those things which seem obvious when you hear it, but apparently it's not obvious enough.

Sony should launch their own disruptive attack, by announcing that the PS3 will go UP in price over time, $10 a month. This would spur all the people waiting for a price drop to go ahead and buy one before they get anymore expensive, console sales rise, blueray wins, and 3rd parties shift focus to develop on the PS, gaining momentum and an ever increasing profit on hardware, Sony is back in the driver's seat of consoles. MS and Nintendo respond with their own price increases, but by then, it's too late, and they begin to focus on the next generation. Sony not only disrupts console sales, but also the thought process behind marketing all electronics.

"How can Sony re-shape its organization, culture and product development approach in order to be more flexible, customer-centric and innovative in a rapidly-shifting market?"

The problem with customer-centric development is that you're one or two steps behind most of the time.
Quite often customers don't know what they want or can't make up their minds, until they see something (or someone else with it) and then they want it (too).
Therefor, you got to keep ahead all of the time otherwise you'll loose.

Now, you can get flexible, ( even large companies can ), but if you have a strong vision about where to go and where revenues and profits can be made, you need to hold on to it, otherwise you'll be going nowhere.

I dont think Sony needs to re-shape anything, they've proven right with the PS2, and eventually, they'll prove right with the PS3, cause the product will sell for the coming 15 years.
Even when HD screens become mainstream, the SP3 will meet that customer-driven HD content.

The Forbes article says that sony needs to get into casual gaming. I agree, and apparantly a lot of other people do as well. But, is Sony even in a good place to put out casual games with a $500/$600 console? No.

It doesn't make sense to target higher-end gamers and at the same time put out lower-end games for them, so when Sony does want to get into the casual gaming thing, it would be when they can ratchet the price down to mabey $400 or $300.

Are you guys serious with this stuff? I thought it was a rediculous saying at 10 years...but 15 now? Even the glorious PS2 has only been out for 7 years and its sales have already started to wane a little, that winding down is only going to speed up as this console race solidifies itself more and more and PS2 sales will probably be negligable at the end of 2 years from now.

But just because the PS2 goes on to survive 9 years does not in any way mean the PS3 will do the same. The PS2's continued success is due ONLY to its runaway success during the early and middle portions of its generation. Sales don't just magically continue because the console has a Sony logo.

PS - Part of a company having good "vision" is realizing when the vision they are pursuing is a bad idea. I wouldn't go so far as to say that is the case with the PS3, but I think even the staunchest fanboy has to recognize there are alot of things they could of done differently.

Edit:

@Dallas, 

I am not even sure that a $300 price tag would get many casuals to be honest. I think the reason the Wii sells to the casuals is the remote.  I would actually say that for most casuals a $250 price tag is still something they aren't comfortable with, but for something unique they seem to be willing to splurge. I don't know if a PS3 would have that same appeal to them, and before someone has to jump on the "omg blu-ray is teh FUTURE!!1!!11!" issue, you have to realize that most of these casuals 1) have no clue what it is, 2) don't have HD TVs, 3) probably don't care...they are casuals afterall. I could add a few anecdotes to support the claim but honestly they have no validity for practical debate.

There is another option that they did not consider. My choice would be to forget about this generation and just focus on making a profit from here on out. There is no chance for either the PS3 or 360 to "win" by numbers. It simply will not happen any more barring some kind of disaster at Nintendo or a miracle by the invisible man. Instead of trying to win by numbers just chalk it up as a lesson learned and focus on decreasing the price of the PS3 so that it is more accessible to the masses and on making good games... something Sony is sorely lacking in and something MS needs to expand on. Both need to bring their consoles down to the $300 range. MS needs to somehow break the Japanese market and I dont think this will happen with the console alone. They need to leverage their OS monopoly. Sony needs to hire new qualified folks and remove the current incompitence working in high positions in their offices. They should have known from past experience that their $700 monster was going to fail but they simply have no one with enough brain power to see it. They need to make a profit this in gaming this next 4-5 years and then start work on a new console. Nintendo is hardly out of the water as well. They should be very worried about the next gen of consoles now that both MS and Sony have learned a valuable lesson.

Doubt the ps3, as much as you want ounce that $399.99 price tag is here we will be seeing who is in the lead.

Quoted Fo Truth yo!

are you forgetting that once the ps3 gets to $399.99 the wii  could be at $150 or even $100.

THEN we will see who is in the lead!

Some sony fanboys seem to think that only the ps3 is gonna go down in price.