First off, it's not just Sony.  Matsushita (Panasonic) holds more patents in Blu-Ray tech than Sony, and as DMesiterJ pointed out, the BDA consists of over 240 companies over and above the nine original founders.

Secondly, Sony has had it's hand in many successful formats, most notably the CD. 

Third, it is a victory.  The current price doesn't mean squat.  They have the ability to drop prices to $199 whenever they want, and if they feel they aren't selling well enough, then they'll do just that.   You can't say it won't be a "real" victory until they break $199, because they have the ability to do that whenever they want.  There's obviously a reason that they haven't yet.

I agree with this.  There's a reason Blu-Ray standalone players were outselling HD DVD standalone players over the holiday shopping season despite being almost twice as expensive.   And then there are the people that bought a ps3 instead of a standalone player, but would've bought a standalone player if the ps3 had not been available.

The ps3 only helped Blu-Ray in two ways:  First, the mass production of Blu-Ray drive components helped to decrease manufacturing costs of Blu-Ray players across the board, and second, it led to Blu-Ray quickly gaining back ground over the '06 holiday season.   That's it.  It didn't carry the format the entire time, it was just an added advantage in numbers over and above the BDA's other advantages.

Toshiba simply could not win with the entire CE industry and the majority of studios working against it, low prices or not. 

And the standalone players was why Warner went to Blu-Ray, not the PS3 (although they could still have chosen a better time to do it, and not made Toshiba lose face at CES).

Sony put Blu-ray in the PS3 for two reasons, first and foremost, you cannot beat a format in a game console. Anyone who thought Blu-ray would lose after the PS3 launch is quite foolish. And secondly, the 50GB of space helps push the Next-Gen-ness of the PS3 and allows for better games.

Simple as that, there was no risk, Sony knew the PS3 would succeed either as a gaming machine or a Blu-ray player or both.

I think blu-ray has done Sony more harm than good, and i feel it is the reason Sony will most likely not win this generation of consoles.

This is why...
-Lack of Blu-ray diodes limited number of Launch PS3s in US (got off to bad start=bad media)

-PS3 have launched for about half the price if it wasn't for the cost of Blu-ray (lower price would=many more sales and would have stopped Sony getting bad media for the price)

-PS3 had to launch half a year later in EU because of Blu-ray diode shortages. (lost 1/2 a year of sales in one region)

-Bad initial sales lost Sony many exclusives (DMC4 comes to mind)

Although if Sony did not add Blu-ray, they would most have most likely lost the format war. They have won the format war at the expense of scaring the PS brand.

As said by a couple of people already, Sony's use of Bluray in the PS3 was definitely one of the reasons for the format's success. Without the system's 'large' user base, disc sales would not have been as high and we'd probably be still without a winner today.

But on the reverse side, the use of the drive was one of the reasons Sony has lost their dominance in the console cycle so far. It increased the PS3's cost and delayed the launch. Sony will not regain the dominance they had with the PS2 this generation. If the PS3 only had a DVD drive, would the same be true? Maybe, maybe not. There are a lot of other factors at play including the early launch for the 360, the Wii's surprising success, the higher than expected price for the 360, etc.

So in the end, was it worth it for Sony to include the Bluray drive (which was the point of this thread for those who have wandered off topic)? Short term, it looked like a completely foolish move. But long term, I think the decision will be viewed as a necessary evil to help secure the Bluray format and in the end maybe even sell the PS3 to some people who would not have otherwise paid $500/400/300 for a stand alone movie player and/or game console.

Sony sacrificed a well known brand, lost several Billion dollars, greatly reduced a long term revenue stream in order to establish a format they have to share the revenue stream from which won't be important for (at least) 5 years at which point it will be in direct competition with the emerging downloadable content market.

Realistically, I think the losses they face from the reduction of the Playstation brand are (at best) balanced out by the gains from Blu-Ray; I do not believe that Sony expected this trade-off and I expect their management believed their own hype and thought the PS3 would be popular regardless of the price.

Perhaps.  It of course depends on how long that format market lasts and what % that Sony makes off of it.

Others on this site have said that Sony's launch and first year of the PS3 will be a business textbook of what not to do.

Seems to me that the followup course will be Microsoft, and how to blow an opportunity.  If they had been willing to aggressively fix the RROD, force Sony into a price war a year ago and push HD-DVD harder for the X360, I think there would have been a much different outlook for both MS and Sony.

Nintendo is just an extra credit course. 

Nintendo would be the How to make money with as little effort as possible course.