I read these articles  http://www.explosion.com/will-this-be-sonys-last-generation/  & http://penny-arcade.com/report/editorial-article/why-sony-and-the-playstation-brand-is-in-way-more-trouble-than-you-think which basically stated the dire situation Sony is facing at the moment.  Do you agree with this sentiment?  With the sales flop of the Vita, and increased competition from both Nintendo and Microsoft that lead to the PS3 being unprofitable this generation( if you add up all the losses since first being released) it's hard to debate the situation that Sony is in troubled waters.  What can they do to stay afloat and not go the way of companies like Kodak, Palm, etc.  Will cutting their losses and dropping the Vita help?  Here's an expert from the article thanks to N4G:

It seems like Sony is going the way of the Kodak camera. Although they initially outclassed many of the other systems on the market by offering incredible hardware, the XBOX 360 offered a significant leap in graphics that put it ahead of Nintendo and arguably on par with the PS3. From this new vantage point, Microsoft cut into Sony’s niche of high-quality, high-priced, exclusive games…while lowering the entrance fee. Even if Sony’s hardware is a better bargain for the price, because it barely outperforms the gaming capabilities of the XBOX 360, it can’t compete with the XBOX 360’s price.

The lackluster sales of all of their current-generation systems may have pushed them into a rut that discourages their continued involvement in the games industry. Sony hasn’t always focused on gaming: cameras, HD televisions, and those archaic things called ‘CD players’ used to be their main industry. Those industries were pretty solid, and excluding the bit about CD players, they had a solid company model. In the past few years the games industry has grown, but perhaps not as much as Sony had anticipated. It wouldn’t be unreasonable of them to choose now to dip out of the industry entirely.

The price of the Vita, and what it will cost Sony

The design of the Vita is also going to come back to haunt Sony. The $250 system, complete with expensive, proprietary memory, is sold at a loss, with Sony hoping to recover that money in game sales and volume. The system has hit a rough patch at retail and, once again, it’s likely Sony is simply unable to lower the price to take advantage of the strong software support that’s on the way.

How bad are Vita sales? Sony hid the sales numbers of the Vita in its financial report by combining the sales of the PSP with the Vita. The results were still dire. “In a newly released earnings report [PDF] for the quarter ending in June, Sony revealed that the PSP and Vita combined for just 1.4 million sales worldwide. That’s less than the 1.8 million units the aging PSP sold by itself a year ago at this time, and less than the 1.86 million 3DS systems Nintendo sold in the same quarter this year,” Ars Technica reported. That’s not to say that Nintendo is in the free and clear, as both Sony and Nintendo are scared shitless of Apple’s market penetration when it comes to gaming. Neither are likely to repeat the successes of past portable systems, but Nintendo is at least in a better position with lower-priced hardware that isn’t trying to replicate functions of your smart phone.

Vita situation, PS3 red ink, lost marketshare are the big 3.

PS3's only saving grace is their ability to pump out core retail games. But again, aside from the vocal minority who praise Sony for this, sales of such exclusives are dropping fast every year (looking at LBP karting, PASBR, and Sly preorders).

Sonys success in past gens was due to the 3rd party industry more then anything else. Now that costs are high, multiplats are just the way to go. And there goes Sonys former ace in the hole. Cause lets be honest, Sony has no Mario or Halo to carry the console.

On the Vita front maybe... On PS4, no... still a huge brand, probably the biggest of the three (but while not on red alert, a cautious yellow alert is wise)

I think the safer one is MS, really (outside Nintendo in Japan).
Sony must differentiate a little more this time from the Xbox though... I really don't think they can take another round with them, being as similar as this gen. MS is just too powerful to be taken head-on. The famous gap is 2 million in reality, but if you take off Japan (where MS never had or will have a chance) it becomes even bigger... showing how much space Sony lost to them in the west this gen, and how much MS grew... and that happened while Sony did a super fine job (better than MS to most, including me) on game develoment

It totally carried Xbox 1. Halo CE made the launch a success and Halo 2 saved Live as a subscription based service.

This gen I'd say Halo still has a hefty responsibility, offsetted by MS increased 3rd party support this gen.

Well 3rd party games = revenue for sony either way.. so if COD sells 10 million copies.. sony makes a load of money on COD..

and the PS3 is not being sold for a loss.. there is no way in hell they are selling it for a loss considering their gaming division was profitable in 2011.. and they just released a model made by much CHEAPER parts.. for a HIGHER PRICE.. they are probably making way more money on the new ps3.. than they were the last ps3.. and I really doubt the vita is selling for a loss.. despite their marketing.. hardware development.. ans oftware development on the vita.. which brought almost no money to sony last year.. they still were very profitable with their gaming division..

and about 1st party exclusives selling less and less... look at Uncharted 3.. and I'm sure god of war Ascension will top at least 4 million copies..

Sony's success this gen is based on how much of a better company they have become in just 5 years.. they connect with their fans.. they listen to their needs.. in game xmb being one of the biggest examples of that(although they needed it considering PSNs features were lacking severily compared to XBL at the time..).. PSN is one of the best video game services in gaming history.. and they keep getting better with PS plus.. which offers way more value than XBL or any other service could probably ever dream of offering..

Sony fighting to stay relevant?

Who?

people shouldn't ignore that one of the BIGGEST and probably MOST RELEVANT REASON why the PLAYSTATION 3 failed and fell well behind the XBOX 360 and NINTENDO WII early on is because sony launched a console for $600 expecting people to work a 2nd job to buy a playstation console.. Sony had a great line  up their first year... RESISTANCE/MOTORSTORM/UNCHARTED 1/RATCHET AND CLANK/CALL OF DUTY 4/ASSASSINS CREED/HEAVENLY SWORD/and more.. but.. their price just almost destroyed any chance of them even competing for a couple of years.. yet they still managed with the 40gb ps3..

price/PSN were probably the biggest reasons why sony fell behind and are catching up today

the articles listed here have a "looking at the glass half-empty" feel

yes had an absolute horrible start, but has really picked up their game these last couple of years; i'd say since 2009 with the "revision" and abundance of first-party titles. if any thing Sony has put them selves more on the map with just their critically acclaimed first-party games such as Uncharted, Heavy Rain, Littlebigplanet, Infamous, God of war, Killzone. Yes the PlayStation division is nowhere near what Sony wants it to be, be it's far better than where it was in 2006. I don't know where Sony draws the line for losing money, but after spending 2.2 bil on that music company and another 380 mil on Gaikai, it still seems Sony's pocket are somewhat deep. and with the PS3 "slim" coming out Sony is bound to make up for some of their losses

as for the Vita, I won't consider it a flop just yet, the product hasn't been out for a year yet, and hasn't gotten itself a full holiday season to show what impact it can do. if it goes the route of the PS3 I wouldn't call it a failure. I could be wrong and this information could be incorrect but I remember someone making a thread saying that the vita cost about $160 to make, though that doesn't make the vita profitable from the get-go, it could mean that it can reach profitability after all the R&D costs.

Your not taking into account the percentage of royalties that goes to Sony/MS/Nin from 3rd party games. Your also not taking into account a corporations various expenses. COD makes more money on 360 obviously, but I digress. My origional point on how Sony has smaller 3rd party support gen to gen has not been disproved by you.

Oh rly....I had no idea PS3 was profitable now.......I am offcourse referring to "total gen red ink". I can remember those news stories about 5+ billion losses, burning through ALL PS2 profits. Now please tell me if you seriously think Sony made all that money back in the last 2 years of selling PS3. Thats what I thought.

So you are telling me that Sony is adopting the Halo model.....take one exclusive and really develop it. GOW being the MS equivalent to Gears of War. Not in genre, but in sales potential. Offcourse Halo/Gears are bigger then Uncharted/GOW, but Sony is now adopting the 1st string, second string exclusive approach. The rest seem to fall under the radar......which was my origional point.

Success is based on profits, sales, and marketshare. I dont make the rules. Sony is down in all 3 counts compared to last gen. Nintendo and MS are up. You say they listen to gamers........then where are the uber preorders for PASBR if it was made as fan service?????

Its mentalities like yours that I really find interesting....in the face of such a downgrade gen over gen, you insist things are so rosy in camp Sony.

I think Sony Computer Entertainment can continue to stay perfectly relevant so long as they realise that they are not the same company they were during the PS1/2 era and will probably never return to that dominance.

Make more sensible decisions. I'd actually say that their decisions in regard to the PS3 since about 2009 have been pretty fantastic, so continue this momentum forward with the PS4. Focusing on the core with the option for more family-friendly stuff (EyeToy/Move/Buzz games etc.) is a good choice of direction. They can at least stay relevant in the home console space (so long as home consoles stay relevant).

Handhelds is another matter. I think Sony is done on handhelds after this round, but they can still make Vita a success in the long run and I honestly believe they will.

All this comes under the umbrella of "Sony Computer Entertainment" though - the fortunes of the whole company is again, a completely different matter, but that's for Kaz to worry about :P
I still think the Playstation brand a big enough influence to maintain a lot of ground in the gaming world. But, that's just my opinion :)