good discussion, but noone mentioned the 600lb gorilla in the room...what the accountants refer to as 'industry exit'.
When a product is unprofitable but has positive margins elsewhere (ie it supports blu-ray, or helps pay the bills in a plant where other profitable products are made) you keep making it short term. Long term, if the product appears to have no chance of profitability you stop making it aka 'industry exit' (blu ray doesn;t need it, the lease on the plan expired and the company can move to a smaller plant...)
Sony needs to
A) Cut the price immedidately to build critical mass in the marketplace for the PS3. It does not have that now. It needs to be within 80% of the sales of the xbox360 to be relevant in the HD market. Today that means it needs ~ 23M*.8=18.4M It is already behind and falling away every week...
or
B) prepare on withdrawing from the home console market.
So in early spring of 09, look for a drastic price cut...or a fire sale...
Trying to convince me the Wii is a real adult game machine 'if you play it right' is like trying to convince me Tofu tastes great 'if you just cook it right'
