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I really believe the PS3 would have done much better. I know I would have bought one sooner and believe that it would have gotten more of the stand alone Bluray player sales. The system is quite good and I agree the lack of SW is an issue. I think 400 and a promise of great SW is very different thatn 600 and a promise of great SW. I do believe that $299 is still a magic price point (having worked in Consumer Electronics for 10 years), and have constantly watched sales explode. I would expect PS3 to be at 16 Million by the end of the year if they had started at 400. Also I think that both Microsoft and Sony need to get rid of the multiple SKU's. This is crap, and any confusion for a sale is a potential lost sale.
RabidBunny