NPD Gamasutra article (interesting facts on Sony)

[theRepublic]

Gamerace said:

Yeah, Sony relies on the 'Blades and razors' business model.  IE: Sell the blades at a loss and make money on (overpriced) razors. 

Worked great when they dominated.   Doesn't work so well when you don't.     Sony owned the casual base with the PS2 but they allowed MS to lure them into fighting them on their own domain (PC centric core games like online FPS).   Sony took MS on full bore with the PS3 simply assumed their casual audience would tag along when the price dropped down.   Seemed like a safe bet, until Wii arrived 2 days after PS3 launched and immediately starting taking all the casuals gamers.     Now Sony is stuck in a bloodletting competition with MS for one side of the market while Nintendo is king of the other. 

At this point the best thing Sony can do is survive until next generation while minimizing loses.   I expect the PS4 will be nothing more than two PS3's ducted-taped together with the wand as an integrated part of the controls and they'll drop the blades and razors model and sell consoles at a profit.

Psst...you got the model backwards.  Razors are sold at a loss (one time purchase) and blades are sold at a profit (many bought over lifetime of razor).

@OP

Great article.  I wish more stuff like this was posted on the forums instead of the silly opinion pieces we see all the time.