Component issues aside, the PS3 price reductions to date, allowing Sony to relatively speaking move in lock step with Microsoft - have been possible because of residual strong PS2 software sales, and decent hardware sales (it did afterall outsell PS3/360 in 2007). PSP is also a profitable device for hardware and software at the moment - and Sony is still losing money in the gaming division.
Over the next few years here is what happens:
1) Sony spends tons of R & D on motion controllers
2) Sony loses PS2 software revenue, PSP software revenues and hardware revenues will probably decline slowly unless PSP Go completely flops
3) Sony begins development/planning PS4/PSP2
Microsoft just has 360. If 360 does better, they make more money on gaming, and if it doesn't Windows keeps it chugging along financially.
With PS2 about gone in terms of subsidizing cost, and PS3 now trending below PS1 in every world region, PSP Go is being released at $250 to try to offset some of the lost financial flexibility. But it probably won't work mainly because PSP software is already declining worldwide even though hardware sales are peaking at very respectable (~75% the PS1 shipment peak) totals.
This is how I see it at the moment for Sony:
March 2008 Year - PS2 154m, PSP 56m, PS3 58m (268m)
March 2009 Year - PS2 84m, PSP 50m, PS3 104m (238m)
March 2010 Year - PS2 50m, PSP 45m, PS3 125m (220m) (Miss projection of 240m by about 9%)
March 2011 Year - PS2 25m, PSP 35m, PS3 150m (210m)
March 2012 Year - PS2 8m, PSP 32m, PS3 130m (170m)....PSP2 (10m)...180m
The royalties from PSP and PS2 software are going to dry up to the point where Sony is going to have trouble dealing with the might of Microsoft financially when 360 development is easier to jusitfy from a royalty, user base, and game cost perspective to many publishers. Wii and DS offer less risk as well. In Japan, if you make a third party exclusive game for DS for the region and it sells 100k, your reaching less than one in two hundred DS owners and you can be profitable on that. For PS3, an exclusive for Japan needs to reach 1 in 6 users at least to be profitable. Wii and PSP fit snugly in between, but until DS stops being the least risky platform, it will continue to kill everything in Japan, while PS3 simultaneously suffers from the Wii and 360 and DS bases in the west.
People are difficult to govern because they have too much knowledge.
When there are more laws, there are more criminals.
- Lao Tzu
