$599 is where they failed, and complicated architecture
What killed Sony was losing all those exclusives. GTAIV and Assassin's Creed were supposed to be (timed) exclusive on the PS3, but Sony denied (due to having spend all the money on the Cell and Blu-ray). PS3 not selling well forced Square Enix to put Final Fantasy XIII on the 360, and Microsoft started paying for other games like Star Ocean, Tales Of, and Ace Combat.
What Sony should have did was just use a generic Power PC processor like the 360 did. Steve Jobs rejected the Cell and he was right. The 360 cost $330 to manufacturer in 2006, so if the PS3 had similar specs (but better) it could have cost Sony only around $500 instead of $840. Not to mention it is easier to develop for. Sony then sells the PS3 for $399 and dominates - sells maybe around 110-120 million.
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