The PSP is not a failure, when was the last time a company did that well in the hand held market other than Nintendo? I think they should stay in the hand held market and they are already at 22 million user base, they should release a PSP 2 or something soon though...
Also even if the PS3 'fails' (as in finishes 3rd) , there will be a PS4...
Thanks to Blacksaber for the sig!