I think it would without a doubt. People seem to forget the PS3 was delayed because of Blu ray diode shortage. Had it not been for those shortages they would have launched 6 months sooner at a much cheaper price and beaten the Wii to market.
@greyian, The Cell was produced 2 years before the PS3 even came to market. Sony knew all along they were going to be using it. The two really have nothing to do with each other though , and in many ways its the Blu ray that is holding PS3 back in many games. It's single speed and just cannot keep up which is why some games have 5 gig installs.
They could have just went with DVD, included a bigger HD and just had people install games like they are doing now.
I do agree with one point of yours, it would have been sold at a loss. Just like the PS3 and all their other consoles were, however without the high development costs of blu ray the system would have been much cheaper overall and would have broken even long ago at its current price rates
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