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Kantor said:

They didn't think they would do well with a $600 PS3. They just thought they would do better than they ended up doing.

It's for the best that they didn't, of course. Less money lost.

They didn't think they would do well? Honestly whats worth more to anyone, 11c per disc royalties or leadership of the console industry and billions of dollars per year profit? No rational mind would give up billions per year in profit. The opportunity cost here isn't the cost of PS3 vs possible royalties, its billions of dollars profit not made + losses made vs royalties at 11c per disc.