Part of costs savings rely on volume. They simply can't produce in volume if they are only selling 200k a month and have millions of units in warehouses.

 Just because the PS3 isn't doing as well as other consoles doesn't mean it's a failure.  The PS3 is similar to the Gamecub.  The people who had it love it, it had some wonderful games that are very good, and it wasn't a failure.

Except the GC made a profit from the start. The PS3 is losing money and has dug a $2+ billion dollar hole.

I see them dropping the price, but I doubt it will be by more than 100 bucks (most likely only 50 bucks) and I expect both the 360 and Wii to follow suit, basically nullifying any effect. Until they get it down to 300 bucks it's just not going to sell.

Look at this chart.

I am a huge Nintendo Fanboy (see my blogs 1 2), but I find that chart very interesting.  PS3 us selling at almosty exactly the same pace as PS2.  The Wii's rediculously high sales really over shadow the fact the 360 is sell really fast and so is ps3 in regards to previous generations

This topic has been debated to death. The PS2 lanched in Japan ONLY for the first six months. The PS3 has not even sold as many PS3s in 7 months as the PS2 did in first TWO DAYS in Japan.

The PS2 was ridiculously supply constricted in the US and Europe after launch.  

 When I saw the PS3 is like the Gamecube, I meant just what I said above.  It isn't going to do nearly as well as the other consoles, the people that have it will love it and love it unconditionally, and it will have some great games.

 I am by no means a PS3 fan,  but I by no means think it's a failure. 

 Based on your definition, the Dreamcast, Jaguar, 3Do, etc are not failures.

I think we lose sight that people don't buy systems because of what the other systems are doing. If someone wants a PS3 but they are waiting for a game or price drop, they want a PS3. I want to own all three, but I am only going to buy a PS3 60gb when it is 499, I am sure others might be waiting for it to be 299 or for FFXIII or MGS4. I really think alot of gamers don't care about sales numbers or read gaming/business sites. They go in to the store and see what's on the shelf at Wal Mart. We are the smaller group. I think PS3 will catch up as games and price drops happen, I don't think it is just going to die out.

BTW. I also think that if PS3 came out with a bundle of 2 controllers, headset, component/hdmi cables for $599 the sales would increase dramatically. The (basically required) accessories are too expensive. That is why I didn't buy it last week. Because by the time I buy everything that I need to have an enjoyable HD gaming session I would have spent about $800 with a game with tax. I have spent $700 on my Wii but I have a crap load of controllers and games. I spent about $900 on my 360 set up (before my 360 died right before the warranty extension) and it was adequite. My PC cost me three hundred bucks with the monitor after rebates (Athlon64+1 gig) I spent 150 last week on a PNY 8500(dx10 compatible), and can play games that look better than PS3 (debatable) and do work, just not on the coach with friends. The PS3 is too expensive, unless you want to overpay and risk early adoption of BR discs. I can't wait til Final Fantasy XII or Uncharted comes out, and I like the looks of the Agency. If they could get those games or other killer apps out before a price drop I would probably break down and buy it. But I know I am a minority.