This thread made me LOL so hard I nearly choked. :p

 1) Wouldn't make any difference

2)Sony has lost 3.6 billion in 2.5 years. What's another 2-3 billion in one year in losses right ?? Nevermind that sony has huge debts and has to lay off an army of people.

3) Great idea. Cut one of the few things that bring a few profits to sony's gaming division so that the , now priced at 299$ with a free game+HDMI cable according to your second proposition, ps3 can completely destroy sony.

Simple? Perhaps. Easy? Feasible? Not on your life.

1) Whether or not this is really possible depends largely on how they implement certain aspects of their OS. Certainly Sony should do this -dropping BC was yet another in Sony's long list of colossal mistakes with this console- but I think you underestimate how easy it is, even for a company with full access to the system's specs and documentation. Even the PS2 wasn't actually 100% backward-compatible, though it did come damn close.

2) Sony cannot do this. The losses they take are already too huge, and they are not in a position to sustain even worse losses than they currently do for the amount of time that they would need to sustain them. Depending on who you ask, they might not even be in a position to sustain the losses they're currently taking for long enough. Companies cannot run forever on debt alone, and a large part of our current economic problems can be chalked up to people and companies that tried to do it. Sony did too, actually, and now they are paying the price of that risk.

3) While stopping production of the PS2 would indeed push PS3 sales to some degree, it is unlikely that it would boost PS3 sales by enough to justify cutting loose such a profitable part of Sony's catalog. See point 2, above. Also see point 1, given that full BC is frankly a necessity before Sony can hope to do this without alienating fans.

You ask why Sony hasn't done this. I can give you the answer in two words: it can't. Sony has painted itself into a corner, to the point where they simply can't do what needs to be done to save the PS3.

The best thing about this thread is that the OP is actually serious.

Yes, but doesn't Sony want to win enough to throw some of their equity to the wind?  They sold their insurance division shortly after the PS3 launched -- maybe they could sell their music and movie studios to afford these bundles and discounts which would slightly increase their chances of ever passing the 360 world wide even though the PS3 would still have no hope of ever reaching profitability overall.

The problem right now is there aren't many buyers. It's hard to get credit for billions of dollars to make an acquisition and nobody wants to throw away all their cash.

I know -- Charter communications is about to find that out as well.  They're liquidating and trying to trade debt-for-equity, which is an odd thing to attempt when you have negative equity.

hmmm this is in OP's signature

"END OF GENERATION PREDICTIONS "9-21-08"

PS3=130M 360=90M Wii=120M DS=130M PSP=70M

Other Prediction: The PS3 will overtake the 360 XMAS of 09 "9-21-08""

If PS3 is on target for both, why would Sony need advice from OP? or OP means Sony can achieve his predictions by following his advice?

Based on OP's suggestions, money is not an issue. In such case, if Sony gives out free PS3s with no games or movies, they can totally gain the market share for gaming and quickly expanding the Blu-ray penetration. This would totally do better than add BC back to PS3 or bundling games and there is no need to kill PS2. :)