Sony launched with a lot of features and a very high price.  The machine was ahead of its time.  Sony preferred to keep the price high to limit losses, and wait to open itself to the mass market later with to price cuts.  Sony could afford to wait to cut the price, because its technology was so far ahead of its time that the risk of obsolesce was non-existent.  Plus if Sony took a larger loss and sold it at a competitive price, each price drop would no longer serve as an incentive to buy.  Also, there  is no way the expanded audience of casual gamers who may have bought the console at a lower launch price would buy enough games to make the price cut worth it for Sony's losses.

The machine has so much staying power that Sony can afford to slowly cut the price, increasing its sales in intervals and ultimately finishing ahead of its direct HD competitor.  The fact that Sony still has room to cut the price and blu-ray will only get bigger, along with its increased reliability, virtually guarantees that Sony will finish at least in second this generation.  I would give the Wii the edge over the PS3, but with its staying power, it isn't out of the question that the PS3 can close the gap at the end of 10 years.  Nintendo has built up such a large lead, that even though it lacks the staying power, I think Sony may not catch it.  But for making a HD console, Sony had the right strategy.  And Sony already had a successful standard definition console with the PS2 so making another SD console would lead to market saturation.

You had some good points. I also agree that ps3 will end up in second place this gen, right behind the massive $billion white box that we call the wii.

My thoughts exactly.

I like my PS3. A lot.

But cutting the price in half after 3 short years on the market, coupled with a complete re-branding of the system does NOT really = "The machine has so much staying power that Sony can afford to slowly cut the price, increasing its sales in intervals and ultimately finishing ahead of its direct HD competitor."

In my opinion, it was a desperation move that has fortunately paid off in spades, but has not guaranteed a 2nd place finish.

I totally agree that PS3 will finish ahead of 360 this gen, I mean the lead is already under 7 million and PS3 is beating 360 by 6 figures each week.

And PS3 will definitely close the gap on the Wii in the long run. I think after 6 years when the next gen consoles are out PS3 will be the only one that still sells well. The 10 year plan will help PS3 cut its losses and sell more consoles even in the 8th generation.

You've got some decent points.

well it certainly appears as such.

But what about the $4.7 Billion they've made since the PS3 launched? And the fact that the high price and the lack of good exclusives made people like me who have a PS2 get a 360 instead? Can they make the money they lost back by 2015? What if Microsoft come out with a more powerful machine in the next 2/3 years and that starts outselling the PS3? What if the sales don't maintain?

They're starting to look like they're closing the gap, yes but I doubt they thought they'd still be in third place right now as did all of us but will they still be selling as many PS3s by the time they inevitably make a profit? If they do overtake Microsoft will it still be a success if they don't claw back their losses?

*puts up shield against fanboys in case he gets flamed*

If these are slow price drops it should be amusing to see fast price drops.

PS3 rulez!

The ps3 has a long way to go to make it to second place this generation. This post seems to neglect the fact that Sony is still losing massive amounts of money on the PS3. The ps2 was much more profitable at the same point in its life. The PS3 will probably never make its losses back even if it does secure second place so I don't see how Sony's recent business decisions will ever "pay off".

Hopefully the PS4 does better.