Forget the Cell, the Blu-ray drive, and any bells and whistles that increase manufacturing costs. Use a more traditional CPU and a DVD drive; launch around the same time as the 360, and for no more than $400. Launching a less powerful console than the 360 would be fine; just aim for the same ballpark.
Result: PlayStation brand name remains strong, retains exclusivity on several key third-party IPs, and easily beats the 360 in sales. Sony's game division remains the same money-making machine it was during the PS2 era, and when the recession hits, helps prop up the underperfoming divions - instead of helping drag the company down. Oh, and Blu-ray still wins the HD format war, due to superior studio support and the power of Sony Pictures - it just takes an extra year.
(Disclaimer: all of the above is idle speculation, etc. etc.)
