in perfect form, Cell doesnt need to eat anymore. lol

I'm not actually sure that many PS3 games even use all the SPUs on the Cell. Adding more instead of getting more powerful cores in less quantity could be a very bad idea.

Keep Blu-Ray (it's big enough), upgrade Ram and CPU. Surely that is all they need to do? Any cost reduction is good, no matter what company does it. We need a profitable industry.

but not too much :)

This isn't really going to hurt the graphical leap from the PS3 to the PS4 at all.  The largest R&D cost that came from the PS3 was the development of Blu-ray (to address load issues Sony went with a more expensive 2x drive at launch) and the Cell.  However, all of those costs have been dealt with.  I think Sony will stick with Blu-ray tech for the PS4, as the costs for drives have dropped incredibly.  They will probably go with a 6x-8x drive, pretty much eliminating load times.  I also think Sony will go with an advanced form of the Cell CPU, which IBM has said they will continue making chips in the Cell "family."  It should also be relatively cheap for Sony to at least go with1-2 GB of RAM in the PS4.  In the end, I expect the PS4 to sell for ~$400.

Not necessarily, they can still stick by vertical integration while keeping the cost low. The advantage of vertical integration is that there is almost no holdup which in the end does prove more cost effective as time is money. Now if they were going to incorporate another aspect within the already vertically integrated process in the supply chain we have the problem of increased cost. Although it's my speculation, I believe they would probably either A) upgrade their Cell technology and try to perfect it a bit more, or B) go with a closer architecture to the PS2 which developers are familiar with. Actually developers are familiar with either by now and the cost of the dev kits have gone down substantially. Besides Apple is the prime example of a vertically integrated company with their ipads and iphones as far as software and hardware (not sure on the ipod though), this all because it financially makes sense as long as you have a large enough market.

My how the times change, i've been saying it for a while and took lots of flack for it. Cafe WILL be just as powerful as Nextbox and PS4. Nintendo doesn't need to profit from their next console, they made loads from Wii. And they put lots of it towards Cafe. People are use to Nintendo not having 3rd party support, but this time they will persue them big time. Just get use to the fact Nintendo will be hard core this gen. Sounds funny doesn't it? 

http://www.nytimes.com/2011/05/27/business/global/27sony.html?scp=2&sq=howard stringer&st=cse

http://en.wikipedia.org/wiki/Theory_of_the_firm#Transaction_cost_theory

Apple is NOT the prime example of vertical integration.

Bad ass pic of Stringer BTW:

I would rather 50% as large tech upgrades each gen for better features and more games :)