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The bad economy.

You can get a Wii for $250 or the lowest Xbox 360 for $200 OR you can get a PS3 for $400. People really don't have the extra cash to spend right now and are not going to go out of their way to get a PS3 now when the Wii is legendary and the Xbox 360 seems to have most of the "must have" games this season.

Sony really has dug themselves in a hole and its not one they will likely get out of soon, if ever.