Except the Xbox 360s which make up the bulk of the purchases are the same price as the PS3 and those SKUs outsell the PS3 on their own.

That's not exactly true. I'm convinced a gallon of milk is worth more than $4. But I don't buy Alta Dena milk for that much because the store brand is $3. Price plays a large factor in every single industry. It's called supply and demand. The lower the price the higher the demand for a product, the more people will buy it. If Sony lowered their price, more people would buy the PS3. I know you know this, why are you acting like it doesn't exist? I'm not saying it's the only solution to increase sales and maybe not the best solution but it's the easiest and surest way to increase sales and that was the question of the thread.

Can you please link me to these statistics?

"It needs an identity" is the spot-on answer by Raze.

Fanboys LOVE the commercials where "it only does everything" for obvious reasons - - but I don't think they really have for the mainstream.  People who aren't "gamers" want to know exactly what they are buying and what it does, which is why a Wii-mote or a Kinect or a Live to grasp on to is effective. It's also why Blu_Ray was an effective motivator early on before stand-alone BluRay players got so commonplace and relatively cheap.

I really do think PS3 has an indentity crisis this gen. 

The Xbox 360 is $299 for its main SKU

The Xbox 360 average selling price was $269

The PS3 is $299 for its main SKU

The PS3 ASP was something like $315

Whats uncompetitive about that price?

They have the games, Singstar, Eyepet, Little big planet, Mod Nation Racer, Ratchet and Clank, Buzz, Sports Champions, many PSN games and third party ones as well. The problem is their console isn't price pointed for the casual market and they have failed to position their brand as a casual system. Their marketing is unfocused. They try to be all things to all people and that is one of their strengths in providing well rounded products but it is also their Achilles heel. Even the price point for the games, Wii games are priced at $10 cheaper on average. That shows that the Wii is set up to attack a target market and they are focused on going after it. Even if a casual game comes out on the PS3 and it's $40 people might just assume it's $60 because that's how much other PS3 games cost when they come out so they wont even bother to register on their radar. If a game comes out on the Wii they will know it's $50 most likely or less. Sony obviously can't lower the price of all their games but it's one of the many problems that Sony faces to try and brand themselves as a console for casual gamers. 

The Move could be a great platform that casuals would love. But the problem is from a marketing stand point it almost creates more problems than it solves for casual gamers because it's on the surface similarities to the Nintendo Wii. If someone sees a 30 second commercial for the Move it's almost impossible not to think, either that it's a cheap Wii imitation or that it is infact a Wii commercial if they don't catch the ending. Kinect obviously doesn't have that problem and they almost have the same novelty excitement in their commercials as the Wii did when it came out which is great from a marketing stand point to sell to casuals. MS does however have many of the similar problems that Sony faces such as the price point of games and such. 

Sony's problem is not product. Sony's problem is lack of information in the marketplace and brand positioning.

that there's is a 199 sku on the market and 299 has never ever ever ever in the history of ever have been a mass market price.