While an excessively high price point did prove to be a mistake due to stiff competition, it was a gamble Sony took in order to include a Blu-ray player in every PS3. A gamble that paid off. If not for the PS3s (somewhat limited) success, the HD format wars would STILL be going on. In the end it was worth it for Sony as a whole if not for the PS brand.
Sony's biggest failing was ignoring it's own massive PS2 base and launching a system targetted directly at MS's base - the core gamer. This allowed Nintendo to walk in with innovative controls and mass market price point and steal the larger PS2 base (or at least a large chunk of it).
If Sony had launched a weaker, more affordable PS3 with mass market games like Singstar, Buzz and Rachet and Clank (as well as Resistance) right off the bat they would be in a much stronger position than they are now. Who cares if the 360 has better graphics? MS did last generation too for all the good it did them.
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