Then maybe they should have asked the consumer, because gamers were pretty damned adamant about not wanting a $600 console (let alone one that would cost Sony $200 with each sale).

And I'm sorry but Nintendo and MS did get it.

MS only screwed up with rushing to market with the RROD. Otherwise they were able to come to market with a normal-debut priced game console.

And Nintendo knew from looking at the success of casual games on cell phones and PCs that there was a huge untapped market waiting for a user friendly system, and that's exactly what they made. 

So most people seem to agree that Sony MUST lower to $299 unless they want to fall even more behind (it's just slightly obvious), and they need to do it whether they can afford it or not.

How can they regain software support (not the AAA titles, the "everyone ones)?

I don't think so, I have seen many people voicing the same opinion I have (they won't throw away money for market share at this point). A price cut would be amusing to see, but I don't think it will happen. We can make a poll to see how opinions are distributed. EDIT - I just made that poll, here it is.

My impression is that the people calling for a $100 price cut are mostly the ones who want to see the PS3 in second place regardless of the consequences for SCE, Sony and their future.  A lot of them were calling for a price cut before this holiday season too, which didn't happen because SCE wants/needs to be profitable, and they're actually on track to meet their shipment forecasts for the year.

All of this bad press after NPD and Home has got to have some impact on the already low holiday sales. If I was a parent buying a console for my kid, and I read that CNN or Washington Times article, it would make me feel like buying a PS3 would be the same as buying a BetaMax in 1979.....

I find it disturbing anyone would bother reading The Washing Time, and I am fiscally conservative.  I've lived in the DC metro my entire life and both the Times and its liberal counterpart the Post have be forced into my daily life, and it is not pleasant.  horrible publications.

I've never read it, but that article has been linked all over gaming pages and blogs on the web.

"What is the number one rule of business. Give the customer what they want. What is the second rule of business. It is ten times cheaper to keep the customer you have then to convince a customer you do not. What is the third rule of business follow the first two rules, and find out how you can profit by following the first two rules."

And that even counts for the Wii. Nintendo spent quite a bit on R&D, and they had to dock specs to keep the system affordable. Not to mention one of their biggest marketing campaigns ever at $30 million.

I thougt about what I would do, if I was in Sony's shoes?

I don't think this is THE answer, but it would be a start in making the PS3 seem like a good value. I would be EXTREMELY aggresive and immediately take 3 drastic steps:

1) Add PS2 B/C via emulatiuon
2) Include a certificate for 3 Blu Ray discs (only Sony titles) with every PS3 purchase
3) Include an aggressive "Game Collection" with every console sold:

Cheapest Model: 8 Games: 1 3rd party game, 4 1st party games, 3 PSN games
Expensive model:10 Games: 1 3rd party game, 6 1st Party Games, 3 PSN Games

Would the PS3 seem like a better value if Sony included these first party titles in all regions, and add the the third party title listed below that depending on the region?

Cheaper Model: Motorstorm, Ratchet & Clank Future : Tools of Destruction, Uncharted : Drake's Fortune, Hot Shots Golf:Out of Bounds, Echochrome (PSN), Wipeout HD (PSN), Jeoprady (PSN)

Expensive Model: Little Big Planet, Gran Turismo 5 Prologue, Motorstorm, Ratchet & Clank Future : Tools of Destruction, Uncharted : Drake's Fortune, Hot Shots Golf:Out of Bounds, Echochrome (PSN), Wheel of Fortune (PSN), Wipeout HD (PSN)

Add in NA : Madden 09 (or even 08)
Add in Others : Fifa 09 (or even 08)
Add in Japan : Fifa 09 (or even 08) or Super Street Fighter 2 Turbo Remix (PSN 3rd Party)

Obviously Wheel of Fortune and Jeoprady would not work in all regions, but the point would be to add a mix of games that would appeal to everyone in the family, taking a step to make PS3 a console for everyone (which is why I included Blu Ray discs). Have Sony titles keeps the cost to a minimum, and adding the largest 3rd party sports franchise in each region adds to the appeal (and encourages the sale of more controller$).

The upside, for the price of the PS3, you get B/C (all of your old games), a 3 movie collection and a well rounded new game collection from day 1.

There is a downside, a new purchaser would not need to immediately purchase games, but this would get a lot of PS3's out without the need for an immediate a price cut.

If you had not purchased a PS3, and this deal was limited in time (3-4 months tops), would you reconsider?

I thougt about what I would do, if I was in Sony's shoes?

I don't think this is THE answer, but it would be a start in making the PS3 seem like a good value. I would be EXTREMELY aggresive and immediately take 3 drastic steps:

1) Add PS2 B/C via emulatiuon
2) Include a certificate for 3 Blu Ray discs (only Sony titles) with every PS3 purchase
3) Include an aggressive "Game Collection" with every console sold:

Cheapest Model: 8 Games: 1 3rd party game, 4 1st party games, 3 PSN games
Expensive model:10 Games: 1 3rd party game, 6 1st Party Games, 3 PSN Games

Would the PS3 seem like a better value if Sony included these first party titles in all regions, and add the the third party title listed below that depending on the region?

Cheaper Model: Motorstorm, Ratchet & Clank Future : Tools of Destruction, Uncharted : Drake's Fortune, Hot Shots Golf:Out of Bounds, Echochrome (PSN), Wipeout HD (PSN), Jeoprady (PSN)

Expensive Model: Little Big Planet, Gran Turismo 5 Prologue, Motorstorm, Ratchet & Clank Future : Tools of Destruction, Uncharted : Drake's Fortune, Hot Shots Golf:Out of Bounds, Echochrome (PSN), Wheel of Fortune (PSN), Wipeout HD (PSN)

Add in NA : Madden 09 (or even 08)
Add in Others : Fifa 09 (or even 08)
Add in Japan : Fifa 09 (or even 08) or Super Street Fighter 2 Turbo Remix (PSN 3rd Party)

Obviously Wheel of Fortune and Jeoprady would not work in all regions, but the point would be to add a mix of games that would appeal to everyone in the family, taking a step to make PS3 a console for everyone (which is why I included Blu Ray discs). Have Sony titles keeps the cost to a minimum, and adding the largest 3rd party sports franchise in each region adds to the appeal (and encourages the sale of more controller$).

The upside, for the price of the PS3, you get B/C (all of your old games), a 3 movie collection and a well rounded new game collection from day 1.

There is a downside, a new purchaser would not need to immediately purchase games, but this would get a lot of PS3's out without the need for an immediate a price cut.

If you had not purchased a PS3, and this deal was limited in time (3-4 months tops), would you reconsider?

Sony's arrogance has led to its own demise. When PS3 launched back in 2006 they expected PS3 to sell 5 million consoles with no good games. PS3 had a staggering $600 price tag and the advertising of get two jobs people to buy a PS3 did not go down very well at all. Sony's sales and marketing have been a joke and have hindered sales of the consoles and its games.

Nintendo's Wii has risen to the top and destroyed PS3 in console and software sales due to its more attractive price tag of $250. Even MS's under dog XBox 360 have had Sony's PS3 on the ropes.

Nintendo and MS have both in a way helped kick some sense in Sony this generation. Sony will learn a valuable lesson from this experience and not to make the same mistakes in the future. Next generation Sony will have to work harder and not take the gaming community for granted and not to force a media format that is untested onto people at a premium price.

After seeing people willing to line up for four hours rather than first chance to play the PS3 or 360 at E3, was already a very clear indication what was going to happen.

Its two years now and that hasn't changed either.