Like any product line, the PlayStation brand should be abandoned as soon as it becomes disrupted. So about 1.5 years ago when the Wii launched. If they want to stay truly competitive, their best option (which would seriously piss off their userbase) is to abandon the PS3 and PSP, start a new product line with matching or superior values to the Wii's (in terms of mainstream opinion, not in terms of the existing core demographic), and give the new line a different brand name.
At this point, however, Sony does not appear interested in abandoning their secure upmarket position for a less secure but potentially more lucrative downmarket position. Which is ironic for a company whose first products were very affordable transistor radios which outsold the competition of the time because they were portable (and thus fit peoples' needs better than a home-based radio). I guess it all comes full circle eventually...
Sky Render - Sanity is for the weak.
