When you take multiple products and combine them the typical consumer will see the value of that product as the (usual) price of the most expensive product that they're interested in. In order to convince a customer to buy that product they have to see the value in paying that price for your system based on the components they're interested in ...

At the moment, most people do not see much value in a Blu-Ray player and as time goes on the price of Blu-Ray players is declining which prevents people from ever seeing much added value from its inclusion. What this means is that Sony needs to justify the $100 (or more, depending on how you measure) price difference between the XBox 360 in order for most consumers to see the value in buying a PS3 over the XBox 360.

This is why I would say that Sony has a much more serious value problem than a price problem, because if they reduce the price of the PS3 it is likely that Microsoft will match their price reduction ... this means that they will remain in a similar position and have to demonstrate added value in buying a PS3 over an XBox 360.

The attach rate being "good" or "bad" is irrelevant. How does the attach ratio * the installed base compared to the Xbox 360. They're both much lower than the Xbox 360, making the Xbox 360 a much more attractive platform for publishers.

Further, revenue suggests profit but doesn't mean profit. Making money is all that matters. If you made 10x as much revenue on a Xbox 360 game as you did on a Wii game, but the Wii game made twice as much profit, then the revenue indicator would be completely irrelevant wouldn't it?

In most cases companies brag about revenue when they have nothing to brag about.  The conversation goes like this:

"Look at how much money we brought in." 

"But you didn't generate a profit, so you were a failure." 

"We know, but it sounds better to say we made the most revenue than it does to say we were a failure at our core business strategy, so we'll say we made the most revenue."

Agreed -- my wording was poor.  High revenues /suggest/ profits for many people.  However, as Microsoft has shown before, if you have a business plan that executed poorly you can have the highest revenues and negative profits.

Right now Nintendo has the most revenues and the most profits, so you don't hear Sony or Microsoft talking about revenues.  Sony used to talk about revenues or sales numbers for the Playstation family but didn't compare them to the Nintendo family.

Do you think with N64 & Game Cube being lambs to the slaughter attributed to Sony getting caught off guard somewhat? I.e. Not thinking the Wii would compete possibly?