It's probably too early to analyze the whole situation, but I agree with HappySquirrel in that it's definitely not too early to view the launch and first year as a failure.
Maybe PS3 will turn it around in the long run, but I don't think even Sony believed that PS3 would be in third place for most of the first year only to come back a couple of years later.
As for why it failed, certainly things like price and lack of games are worth considering, but what was it that Sony did to lead to those things? I mean, no company plans to launch a game system at a price consumers won't buy and without any appealing games...you make mistakes along the way that cause that. What were they?
For that matter, a weak game lineup is pretty much par for the course in every system's first year. I admit that PS3's holiday season is looking so-so, but from January to September, the first year is bad for any system you can name. In fact, if it wasn't selling so well, we'd all be blaming lack of games for Wii's failure.
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