I'll admit, I was providing a single example. And you do have a solid grasp of it. But there are fewer true pirates than there are circumstantial pirates. Circumstantial pirates are the result of supply and demand not being in equilibrium. As you pointed out, this lack of equilibrium does have many causes besides price, and lowered price on software won't necessarily drop piracy entirely.
The most important component was ignored, however: how the product is perceived by the end user. The PSP is not looked at as a gaming-centric device, for the most part. The mainstream see it as yet another all-in-one device, with an overblown price tag to match. And part of the justification in buying such a product for somebody who doesn't really want to pay that much is that they can just get the media to play on it for free. Remove that option, and hardware sales will drop down to match the true demand for the product as a gaming system or all-in-one system.
Sky Render - Sanity is for the weak.
