I love it. Your old games matter, but only if they are REALLY old. But the Sony "core value" was that ALL of your games mattered.  "Backwards compatibility, as you know from PlayStation One and PlayStation 2, is a core value of what we believe we should offer. And access to the library of content people have created, bought for themselves, and accumulated over the years is necessary to create a format. PlayStation is a format meaning that it transcends many devices -- PSOne, PS2, and now PS3."

I believe B/C will be back. On Sony's timeframe. When they no longer make money on the PS2. They can't afford for the PS2 to die now, so the PS3 buyer is out of luck. Until Sony decides it is time. Which will be when they decide, just like "this generation starts when WE decide". I don't have that exact quote handy, but it's one of my favorite regarding the decline of sony.    

The problem Sony (aside from false marketing, lies and broken promises) have with the PS3 is that from the beginning, they took gamers for granted and used the PS3 to win the video format war (trojan). Thus, a lot of smart gamers backlashed and boycott the PS3. The price was ridiculously high, but considering the high price, it fared well.

 If faring well means selling an ok amount of consoles, then you are correct. But the underlying damage is to the Playstation brand as a whole. The reputation of the brand in the eyes of the consumer is huge. You see PS3 hate in the press, on gamer boards, from clerks at gamestores, coming off the most popular gaming console and brand in history. And this is not even as bad as the losses Sony has taken (losing all gaming profit made from 12 years of PSX & PS2).

The damage is much more than financial, its in consumer confidence. How many PS3 bashers on this and every other site loved the PS2? If you could measure that damage you could really see what Sony had wrought on itself...

On the opposite side, Nintendo's reputation was in the trash can, most thought they were the next Sega. And while they still get bashed for the casual stuff, overall consumer confidence to the brand is the highest since pre PSX. Same with M$, they have only gained consumer confidence, even after RROD (which is a feat in itself).

Am I the only one here that thinks the lies, scheming and broken promises actually helped Sony?  Well it did at first anyways.   It is untelling how many people held out buying an Xbox 360 because of them.  I bought my 360 day one, but to be honest I had my doubts about the system because of what Sony  Execs were spewing about its new system that was just over the horizon.

You mean at E3 2006? "The next generation doesn't start until we say it does!" (Kaz Hirai, May 2006)

The problem with PS3 is, that first its a convergence box, convergence only works when you have a product that does one main thing far better than its competitors and then on top of that has bells and whistles, PS3 doesn't have very strong horizontal or vertical differntiation. Its more powerful than the Wii and possibly the 360, but the 360 comes close enough to have the same games at similar levels of quality, Wii has gaming that the PS3 does not, so the PS3 isn't able to really show why people should get it as a game machine over the 360 and/or Wii. In addition its trying to converge features which are not the industry standard, Blu-Ray is still far from overtaking DVD's and may never become dominant.

Since 360 and PS3 occupy a very similar market, proce between the two becomes very important, and 360 is easily winning that war.

The Wii has enough differentiation, that the price of the 360 and PS3 don't really affect it, plus its popularity breeds more popularity, more people try it at a friend's house and buy it for themselves.

Price, Price, Price, Price, Price, Price= what is holding the ps3 back

From my perspective, it was all about over-tech in the PS3. They built a future-proof machine with a ton of bells and whistles. Also, the HD disc battle didn't help the matter. I said since day one that the over-tech was going to hurt them via price. The PS3 as is isn't dramatically better than the XB360 in game performance and quality. If Sony would have kept its specs moderate, and even offer an non-Blu Ray version of the PS3, they could have competed in price with the Wii. Had they done this, the Playstation brand would have just brought the PS2 fans right over. It was the $500-$600 price tag that made people stop and really think.

Sony are faltering yes...but they will bounce back and so will the ps3

And always will be, since MSFT is one (or two) steps ahead of them.