I think Sony's main focus for stand alone BD player is probably on the high end market. We should also see the incorporation of BD player into Sony's home theater product line pretty soon.

Sony will use Playstation 3 to compete with other manufacturers for the mid end market. Sony probably won't care that much about the sub $100 low end market at this moment because (1) Sony wants to encourage other companies (Korean/Taiwan/China based) to manufacture/sell more BD players, (2) Sony needs to supply enough BD drives to computer manufacturers.

Promoting PS3 as a gaming machine AND a BD player will soon start to pay off for Sony.

Well said.  Variety of the game selection is truly the key to expand your market share as a game console.  That's why each generation of playstation can attract so many users.  Time will tell if it will also happen to PS3.  

Blu-ray is going to be a huge factor. It has been down played by a lot of people, but in the end everyone will realize what a genius move it was by Sony. Even though Blu-ray will never be as big as DVD due to a limited amount of areas having the ablity to download movies, it will still become over 80% of the market at some point.

To the people that say Sony will not get anything from Blu-ray because of DDL, I think you have to look at it a little deeper. Sony is going to have the PS3 in at least 100M peoples hands by 2012, and they will for the most part all be watching Blu-ray movies. Sony will also have movies for download on PSN, and for the people that choose that road. Sony knows DDL are the future, and winning this war was the most important of all time. No thery have the ability to get the movie market for the final physical format, and then once people are up to speed internet wise they can covert them all on their PS3 or other PSN capable devices (tevevisons, Blu-ray players, computers).

Also when did Sony raise the prices of the Blu-ray players. I remember them being on sale for 269-299 during christmas week, and then going back to 399 after the sale was over. How can they raise the price if they never offically dropped it. If that is the arument to be made then Toshiba did the same thing, they sold the players for a few days at 99 then the raise the prices back to 199.

As you have pointed out Bod, Sony has invested a great deal in the entertainment industry. On top of having a movie studio, music label and being in the video gaming market they appear on the verge of winning the hi def format war. So it does seem like strategically they are playing their cards right even though they may appear to make some silly tactical mistakes.

Longterm they appear to be heading in the right direction.

As noted by others their two main advantages are:

a) breadth of company to draw on (not that they always do it well) - i.e. they own content (Sony Studios) they own various HW elements (TVs, DVD players, BR players, Walkman, etc) and they have both HW and SW for their consoles. Compared to all the other players in gaming right now they are they only one who can serve as a 'one stop shop' and so of course they get the benefit - i.e. while I have a mix of vendors (as do many I'm sure) there will also be plenty of folks who are playing a PS3 on a Sony Bravia with a Sony PSP and a Sony DVD player - and perhaps a Sony digital camera and recorder with a Sony laptop just to finish of the package.

b) they have (historically) the best mix of developers and genres on a single platform. PS3 hasn't leveraged this enough yet (I think its actually too close to 360 right now for its own good but that may be Sony desire to try and gain momentum in US). Next Gen had a good article that raised this point well (as did FinalEvangelion) - the real key to PS2 level sales is a catalogue of games so diverse there is something from everyone. PS3 and 360 don't have this and 360 will struggle most trying to get there I believe. Wii stricltly speaking isn't there yet and is still cruising on its own hype - but I think Wii could also achieve a very broad catalogue too.

As noted by others their two main advantages are:

a) breadth of company to draw on (not that they always do it well) - i.e. they own content (Sony Studios) they own various HW elements (TVs, DVD players, BR players, Walkman, etc) and they have both HW and SW for their consoles. Compared to all the other players in gaming right now they are they only one who can serve as a 'one stop shop' and so of course they get the benefit - i.e. while I have a mix of vendors (as do many I'm sure) there will also be plenty of folks who are playing a PS3 on a Sony Bravia with a Sony PSP and a Sony DVD player - and perhaps a Sony digital camera and recorder with a Sony laptop just to finish of the package.

b) they have (historically) the best mix of developers and genres on a single platform. PS3 hasn't leveraged this enough yet (I think its actually too close to 360 right now for its own good but that may be Sony desire to try and gain momentum in US). Next Gen had a good article that raised this point well (as did FinalEvangelion) - the real key to PS2 level sales is a catalogue of games so diverse there is something from everyone. PS3 and 360 don't have this and 360 will struggle most trying to get there I believe. Wii stricltly speaking isn't there yet and is still cruising on its own hype - but I think Wii could also achieve a very broad catalogue too.

Opps - sorry, twitchy fingers! Double post.

WTF? Those numbers are from several months ago. Last week numbers from HMM were:

1. RE:E 100
2. War 75.71
3. POTC 3 65.59
4. RE Trilogy 52.29
5. Shoot em up 48.42
6. HPOTP 43.89
7. Ratatouille 43.63
8. Bourne Ultimatum 41.72
9. SM3 37.35
10. 300 BR 36.70

I am more with makingmusic here .Someone once said that Microsoft had money while Nintendo and Sony have talent and thats just what I think about this situation .

Sony has an ability to attract and keep people with talent with them .Microsoft on the other way can buy them as they did with Rare ,Bungie and Lionhead but they dont have the ability to keep them or keep them focused .They dont have that kind of talent to leave them at their own doing whatever they want .As money is the way they attracted them they want money in exchange so they put them to churn out Halo 3 or Fable 2 or PGR4 as soon as they can .Sadly for them the Rare founders have left the team ,Bizzarre has been bought by Activision ,Bungie is sick of doing Halo after Halo and have broke free ,Lionhead was just bought so lets see what they can do .Other talented first party studios that they have been able to keep as Ensemble are more centered on the PC.Besides ,MS mimicks what can be done on the PC on their console ,there isnt a true creativity in most of their moves.The one big creative thing they made is the achievements system and it has paid off as many 360 owners are in love with their machine just for that .

Sony on the other hand has an ability to attract and keep talented people with them .They can have their high and lows but most of the people working with them directly are quite happy and so they have been able to recruit a developing force like no one has right now .Studios like Naughty Dog ,Insomniac ,Incognito ,Zipper ,Clap Hanz ,Team ICO ,Evolution ,Guerrilla ,Sucker Punch ,Ready at Dawn ,Relentless Software ,Studio Liverpool ,London Studio ,Sony Santa Monica ,Factor 5 ,NInja Factor ,SCE ,SOE ,Games Republic,Eat Sleep Play and many others are all belonging or closely related to Sony and will keep like that for the foreseeable future .
They have also a lot of talent in the engineers and people monitoring the PS3 and PSP software and possibilities .They amount of things the PS3 can do that it couldnt when launched is massive .And when they have acted to create something new to compete with MS they have come up with Home and the new achievements system that promises to go way beyond the MS one.They can also balance their other sections and leverage their products as Bodesthava said ,but I think the true force of Sony Computer Entertaintment is that creative force and adaptability to incorporate (copy as the haters would say ) other ideas while creating their own at the same time .Thats the reason the PS catalogues are finally the most diverse ones .

Right now the PS3 catalogue seems very akin to the 360 .Lots of sports games ,FPS and many driving games too .But ,looking a bit deeper we can see that many genres the 360 hasnt even touched are already represented on the PS3 with games as Ninja Gaiden Sigma or Heavenly Sword or Ratchet and Clank .Its sad the 360 doesnt have a single plattform game after 2 years on the market .Looking deeper we see some truly unique things as Flow ,Eye of Judgement and Singstar .And this will keep growing .

I agree.