Making a powerful console is not the issue. Kutaragi designed the PS3 with no regards to cost and with no regards to developers. He made no effort in keeping costs down during the systems development and that lead to the PS3's insane launch price and manufacturing cost.
If Sony gets back to the philosophy that made them successful with the PS1, not only will they make more money but they will have powerful console that is easy to develop for and is reasonably priced. The Gamecube was cheaper to manufacture than either the PS2 or X-box, was more poweful than the PS2 and could go toe to toe with the X-box. Nintendo made it a point to consider the cost to the end user and it allowed to come out with a powerful and yet inexpensive console. Sony did something similar with the PS1.
Kutaragi started to get out of hand with the PS2 and with Sony promoting him to company president, there was no one to reel him in and let him know that launching a console at $600 would jeopardize their market share. If Sony launched a system that was equal to the 360 at a the same price point, the PS3 would most likely be in second place right now and that would have removed most of MS's leverage when it comes to money hats.
