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If this happens Sony would lose the format war. They can not afford to let that happen. Why else do you think they are letting SCE take so many losses? It was all planned to help bring Blu-Ray to victory over HD DVD.

Sure, they weren't expecting to be selling THIS badly, but a majority of the losses they've taken on the ps3 were premeditated, because the royalties Sony will receive on Blu-Ray technology patents will easily make up for the losses over time.