When the PS2 came out, the PS1 was still selling well. The PS1 might even have had a sales bump, since there was a redesign for it and a portable LCD add-on attachment. Also, I think people who were salivating for the PS2 but could not afford it were picking up PS1's.

They couldn't have stuck with the PS2 in the face of brand new systems.

The real question is should Sony have made 2 versions of the PS3: one with Bluray and one without (priced at 360 level).

I don't think Sony sticking with the PS2 and waiting an addtional 5 years to launch PS3 would have worked out any better for them. With no PS3 being available for the foreseeable future, hardcore gamers would have hopped onto the 360 platform even more quickly. The fence sitters that have no interest in the Wii, but are deciding between the PS3 and 360 would just have the 360 as there choice. Games like FFXIII and MGS4 would more and likely be 360 projects before the developers behind those games like creating games on the most technologically advanced hardware.

The non gamers and diehard Nintendo fans would still be buying the Wii in massive numbers. A large part of the market for the Wii are consumers that are turned off by the more "complex" controllers of the 360 and PS3. They wouldn't affected by Sony staying with the PS2 because they did not show interest in purchasing the system in spite of its price and games selection.

The casual gamers don't usually upgrade to new consoles until they reach a mass market pricing level. These are the consumers that are currently sticking with the PS2 anyway. They wouldn't shift over to the 360,PS3, and Wii until they are priced below the $200 level.

In essence your plan for Sony would be better in the near term, but in the long term they would be in deep trouble. Sony would be better off financially initially because they would have to absorb the R&D costs and losses associated with the manufacturing of the PS3. In the long term they'd be screwed because the would have given away the hardcore market to MS and to a lesser extent Nintendo for a market they are currently retaining anyway.

That market would start eroding away as rapidly when the 360 and Wii were both below $200. In fact when the 360 hits $200, the Wii will probably be $99 to $129. When those consumers go to pick up a new console Sony will have nothing offer them. Worse even if they scrambled to produce a new console to stop their userbase attrition, it would more and likely end up being more expensive than either the 360 or the Wii. So Sony would be living off of the same hardcore market they are trying to make a profit off now, but they wouldn't have the PS2's profits to lean for your hypothetical PS3's launch. They will have ridden the PS2 horse until it dropped dead. Can you imagine the Sony taking the types of losses they are taking currently with out the PS2's profits as a countermeasure?

The big problem with trying to limp through another couple of years with the PS2 is the lack of online, lack of built in storage, and the fact that Sony would have essentially been conceding the HD film market to the HD-DVD camp.

I think it would have been more beneficial to do the opposite of what you're suggesting, and launched a year earlier. The PS3 should have compromised a feature somewhere, whether it was the pursuit of Cell, Blu-Ray, or both, and just gotten the thing out the door with a $399 target ASAP.

HDMI, a year lead-in demonstrating PSP-to-PS3 interconnectivity, and a lower price point probably would have been enough to begin drafting a eulogy for Nintendo, as I think it absolutely would've changed the fortunes of both the PS3 vs the Wii, and the PSP vs the DS.

Blu-Ray could've then been presented as an optional accessory for this past Christmas, after the PS3 already had a 10-15M install base. Bundle one of the 'big' games like Motorstorm with it as an incentive to buy, and it'sGame Over, Sony FTW.

I don't think Sony should have stuck with the PS2 (though I do agree they should have delayed their launch). While I don't like everything in the PS3, it was a good gamble and not every game pays off.

By the end of 2007 the PS2 will be completely dead in Japan and the rest of the world will abandon the PS2 by the end of 2008. Sony could have (possibly) kept the PS2 alive for a little longer by fully supporting the platform but eventually people will be looking for something new.

The problem with the PS3 is not that it was released too early but was that Sony focused on developing the "Greatest Hardware" with little thought towards whether there was benefit; the PS3 is the perfect example of feature creep and gold plated requirements and that is what is killing it.

I wouldn't have liked this as developers would then develop their games with the lower spec model in mind, this is already happening with regard to XBox 360/PS3 multi-platform games currently under development (such as GTA IV).

A larger or smaller harddrive wouldn't really affect games development that much, but to have PS3s with just a DVD drive I think would seriously hamper PS3 games development for the long run, not only to take advantage of more space but also of sustained (predictable) reading speeds for streaming content.

The Amiga CD32 games console had a similar problem as it roughly offered similar specs as the Amiga 1200. But the CD32 came with a CD drive and the Amiga 1200 with a (slow) 3.5 inch diskdrive by default. As developers wanted to support both systems the CD32 mostly only offered some additional content like better introductions, endings and CD music, but the developers deliberately limited their games to still fit on diskettes.

I totally agree with Bodhesatva! The point he has made is a real important one. Unlike some other friend said, with no PS3 in the foreseeable future, consumers would be MORE willing to buy a PS2 because they would know that the console's lifespan would be even longer (thus the money paid for it would be of a greater value), there would be even a greater number of games and the console surely will not be dead due to the vast amount of install base. In the graphics department, it wouldnt be too different from wii, and although would be far from Xbox360, it would still be much more profitable as there was no new development costs for producing a new system and no huge losses due to seeling at lower prices. Sony could have introduced different types of new models though, compatible with old models like Internet capabilities or PS2 with Hard disc for internet content etc.

It would be best for sony to release the PS3 without Bluray, marginal but expensive technology like HDMI, and a cheaper and more general CPU, which would be priced at no more than $400. The Sales would be at least 6 million by now then.

Sony with shares running high and being profitable overall is more than able to handle the current entirely expected gaming division losses. IMO this may be seen as an investment for the future and of course Blu-Ray currently pushing HD DVD out of the market already helps the company's long term outlook as well. Without the PS3 this may have taken many more years.

Darc Requiem really sums it up nicely. My only addition is what Sony should have done is left Blu-Ray IN (it needs to win that war....) but left that Cell Processer out. It only needed to be comparible to the Xbox, not necessarily better (or even as good as).
Their has yet to be a generation where the most powerful system has won (they often lose miserably) so why Sony went with this misguided route is beyond me. Even a dual-core processer with Blu-ray and a $399 price point would have made them far more competitive than they are now.