Sigh... Stupid move. I kinda hope it dies out :/

personally i don't care as I prefer to play the games on the systems they are made and the internet here is so shit streaming PS3 games would be a stretch.

However there is value in what they are doing as it will cater to someone.

I'm still secretly hoping the FTTN NBN will be somehow revived....

me too, but i want it for the purpose of streaming live HD 1080p video lol.

I honestly don't see what you're getting at. The way you're describing it, it sounds like this is perfect synchronization between devices. Someone who wants an xperia smartphone (the play is outdated, so no one is buying them as a gaming device) won't get a vita instead, and vice versa. I don't understand why you keep mentioning bravie either. They're kinda just there. But I really, and I mean really want you to answer this honestly. Do you think a person whose considering getting a ps4 is going to say "No, I'll just go with a vita tv instead." OR do you think it that someone whose going to buy a vitatv is really going to think "Nah, I can afford 4 times the cost." The only competition is for people who are first time buyers of a console, and have to choose between a ps3 and ps4. 

Sony has an interesting strategy that will slowly make more sense as time goes by. One thing that Andrew House stated that really sticks in my mind was that our approach to living room entertainment is very outdated; to me that conjures up an image of my own personal living room space which is filled with consoles, streaming devices, home theatre system, and a bunch of other boxes. I feel with the power of Gaikai as well as other partnerships and first-party services Sony is attempting to reduce the mess in our living rooms by creating one device that does it all. For example, I feel that Sony's grand plan is that one day you purchase a premium Bravia television and that does everything you want at the centre of your living room. Similarly, you can then switch to an Xperia mobile device when you leave your living room space and again have access to everything you need right there. This is akin to the vision Apple had with the iMac (one device with everything built in, no mess, no complications) and with their entire eco-system of products but Sony is making a bolder move.

So rather than viewing this as competition between devices I see it as more of a choice for consumers of what device fits their living space best without having to compromise what they get in terms of software and services; anyways, Sony is making losses on most of its hardware so they might as well sell you fewer devices that fit your life and get the money back through all of their services and software.

I do not know how this will work out for Sony in the future, the idea in itself is great, but as always the execution and practicality is where it counts. Personally, while I am skeptical about certain aspects of their strategy at this time (specifically with the practicality of Playstation Now), I see a lot of room for improvement in the future, and I can see this strategy working especially well for Sony because they have a lot of devices on the market that give people a lot of choice and they have first-party services and third-party relations to back-up their devices.

It's called an eco-system.

I'm not in the market for a new TV, or a new cell phone. But I will have to think hard about Vita TV vs PS4, in the short term at least.

Sony really wants to sell as many Play Now subs as possible because that's where they see their greatest long term profitability coming from. And they have to make their purchase of Gaikai start paying off. Does it matter which device people buy? No, as long as they subscribe to Play Now and stay subscribed for several years. And if you like Play Now on your Bravia TV, or PS4 or PS3 there is a good chance you're going to decide that you want Play Now on the go as well. And vice-a-versa if people start with Play Now on a mobile platform.

That's good. Internal competition is very good.

Tablets, smartphones & TVs are a much larger audience, so while there is some chance that the service will poach sales from potential console buyers, on the other hand there is a chance of expanding the total audience and attracting people to the PlayStation brand who would not normally buy consoles.

Having this service on sony hardware only gets people to say hey if i get the Sony tv over that Samsung i can play games wihtout having a console connected. i like the fact that this is coming to Vita as i love my Vita but the game library is not to my taste, the games i have played most on it is Resogun(remote play ps4) and MLB13 The Show,  and MLB12 TS before that lol.   as to your Bonus Question no, i have a new Bravia screen around christmas, and i can say it depends on the screen quality whether or not the picture will look better, but from my experience Bravias always have a damn good picture.