The PSP is doing ok, heck it's the most succesful non-Nintendo portable of all time, but there is definitely a chance of Sony pulling the plug on the PS3. Not a big chance by any means, but it's far from impossible.

The main reasons I see Sony killing the PS3 early are that it will never make a profit and how Sony is not a gaming company.

I believe the PS3 will ultimately be unprofitable because the whole business model behind the Playstation consoles has always been risky and unhealthy. Sony releases first, sells at a loss, gains third party support, never looses momentum, and finally makes the money back after achieving a dominant market position.

We can argue (and we do ^^) on the ultimate profitability of the PS3, but ending up as a financial failure is definitely a possibilty here. Of course here we have the huge variables of how much the sales will improve during the holiday season, how much the big hits in 08 will help it, and how permanent these sales boosts will be. Let's not get stuck on this, as both making a brilliant recovery and dwindling to near nothing are possible at this point.

Many people bring up how Nintendo kept going through some pretty rought times, and how it took several generations for Sega to drop. The key difference here is that games is all Nintendo and Sega did at the time, but Sony is a general electronics corporation. If their gaming division makes losses for an extended period of time, there will be people high up in the company that want to see it axed. That's how companies work.

The uncertain thing here is that we don't know how much losses the suits are willing to take. It's 100% sure that there is a limit after which they decide to kill the console, but we have no way of knowing how much it is. It depends on a number of unknown factors like the relations between different factions in the corporation wanting to move it in different directions, and how well the rest of Sony is doing when the losses really start to pile up. They'll definitely try dropping the price again, and try a variety of things before giving up if it comes to that.

In the still rather unlikely case that the PS3 is dropped early, the next big question is if they'll try again with another console, or drop from gaming altogether. This is again speculation on things we cannot possibly know, and depends on a number of things like the financial situation of Sony at the time. I'm not touching it with a ten foot stick.

I think Sony has a certain number in mind. A certain number of units must be sold by a certain point. Basically I expect them to have an exit trigger. A point of no return if you will. The only question is where is that point. I think the PS3 triggered such a point earlier this year when they did the price cut.

They probably delayed that somewhat to make for a bigger announcement. However it amounts to a seventeen percent price reduction eight months after launch. Which finally stimulated sales over four million world wide. I would gather that Sony was expecting sales of at least ten million units this year. I would venture a guess that eight million would be the trigger for Sony. That is double the last eight months with a holiday season to bolster sales, and a price cut. Finally they have a stronger lineup.

I would say Sony has to sell that many units to maintain commitment. They miss that target, and six months later you start to see the units disappear off of shelves as supplies run out. Sony will only announce that is what they have done after it becomes apparent.

Sony has investors to answer to, and even though both they and Microsoft have lost a lot of money on gaming. Microsoft is still feeding the masses, and has a reputation for brilliance. While Sony shares have plummeted, and they have had one disaster after another recently. There is a reason for the restructuring. Sony has been firing employees all year long.

The real question is can Sony meet the goals. There has to be a real physical point they have to meet in order to stay with their console. I think eight million is a logical and realistic number. They have four months to make that goal. Now if they fall short of that the implications are real. When you trend worse in the second half of a year with a real price reduction, a increase in software, and a established name. You should have every reason to expect to match the previous eight months, and you should hope to see a increase in sales. Now if the opposite happens its time to start plotting your exit strategy.

Will Sony sell eight million units in its first year on the market? Part of me says that it is such a small number that it should be easy to reach. However the PS3 has consistently underperformed expectations. Further more it spent most of its own time in a downward trend. The competition is exceedingly strong in the second half, and is sure to drive down sales. Nintendo and Microsoft have for more compelling points for the consumer, and to make matters worse Sony appears to have no good answer.

I would have to say Sony will not make eight million sales, and I think that is where Sony will begin to exit this console generation. I am not going with my gut on this, but the trend has consistently shown that the PS3 sales tend to slide downwards. Even after the price cut in North America the sales began to slide backwards again. Sony simply cannot afford to play this race as a Gamecube level seller. They are not using Nintendos model.

What is rather interesting is how the PS2 performs in the coming season. That is where Sony is making money. Were the PS2 to slip in sales that would increase pressure on Sony financially. So that is another area that should be considered.

Why would Sony pull the plug on the PSP. The sales are decent, and they made some ground on Nintendo. They have a decent install base. So they look to be making money there. Even if it is not Nintendo level money.

I don't see PSP lasting the expected "10 years", but I do see it as far to much as a success to pull the plug, of course it's getting it's ass served from the DS but the PSP has so much future potential.

@Parokki:
Sony not being a games company well in the eyes of Nintendo no they are not a games company but in the eyes of Microsoft yes they are a games company.The PS2 was what made Sony MASSIVE and the profits made by PS2 could have probably kept Sony out of red ink all by itself.

Why would Sony leave after one little mistake-pricing-Sega made tonnes of mistakes before they ever backed out and they where just a games company.Sony will stay in just because gameing as been very profitable for them and losing a few billion dollars is nothing major to them and they will release a PS4,5 and 6 remember the interview with Ken"Father of the Playstaion" saying he plans for PS4/5/6 and beyond even though he isnt head of SCE anymore SCE will still have him design parts of the nextgen PS.

Ken Kutaragi was retired. For all intent and purposes he is merely a figure head now. He maintains a honorary position. You will see him occasionally at public events, and the rest of the time you will find him feeding ducks at the park, or collecting dust in a private corner office. A testament as to how Sony feels about his Playstation plans. So I would not take his plans as gospel.

Sony has to determine the risk reward ratio. The situation has drastically changed over the past few years. Now Sony taking another risk after this console generation is not a given. Consoles have become risky business. Considering that a publisher must spend massive amounts of money in the form of start up capitol. Microsoft is not going anywhere, and neither is Nintendo. Nintendo will be flush with cash, and Microsoft has shown the world a serious commitment. Can Sony take another risk or would they even want to.

Seven years is a long time, and we may be looking at a even larger investment by parties next time around. Hell the next war might introduce a unified console.

You just marvelously dodged all of the real points I spent a good chunk of last night typing, and went for the little notice at the end that I "didn't want to touch with a ten foot stick". Ok, I'll use a twenty foot stick. =P

Sony has a chance of leaving the console business if, and only if, they decide the PS3 has failed. You didn't contest any of my points regarding this, so I'm assuming you agree with me. If that still very unlikely scenario takes place, they'll decide if they want to make a new home console, handheld, both, or neither.

As I said, this depends on a crapload of things we simply don't know. How is Sony going to be doing financially? Every second person I talk to tells me they're doing great, and every second one tells me their almost bankrupt.  How much of the Playstation brand name is left? It's still relatively strong, but would get some serious tarnish if the PS3 ended up dying early. What will the people at the top of Sony feel about their fallen starchild? I don't even know who they are, and neither do you so don't try to pretend. =P

Btw, and Sony has made quite a few more than mistakes by my reckoning. IMO they've messed things up worse than Sega, but they have a stronger financial backbone to survive for the time being.

Btwbtw, why are you quoting Kutaragi for anything? I mean seriously, he's the worst liar in the history of the video game industry. Not trying to troll here, but his record is pretty unbeatable.

 TVs, computers, and other electronic hardware was what made Sony massive.  They were big(ger) before the PlayStation than they are now.  Sony is NOT a video game company, not to Nintendo, not to Microsoft, not to itself.  Sony is a multimedia entertainment company.  Their gaming division is the black sheep of the company, and with the PS3's recent poor performance, the Sony higher-ups are starting to get irritated with it.

Gaming has almost never been profitable for Sony.  They take a loss every quarter.  They cannot afford to be losing money if they aren't building market share (which they are losing in excess now).

Sony claimed they would make 9 PlayStations, with the PS9 being the end-all video game console.  It doesn't mean they'll get there.  Sony also claimed the PlayStation 3 would sell 6 million consoles in under 6 months, and now they're looking at 4 million in 9 months (less than half of their expected sales rate).

@Soriku:
I wouldnt call the GC a failure i would call the DC a failure but not the GC.

@Witeout:
Other electronic hardware that classes consoles which has helped and SCE isnt the black sheep really look at the parts of Sony its an ELECTRONICS company PS is electronics if any thing of the company is a black sheep it would probably be SOE which is online and Sony doesnt do much online.There was a thread on profits of each of the Big3 gaming profits and during the hayday of PS2 it made quite a bit of money for SCE in a quarter i think the most was $350million or something close to that,MS was always in the red and Nintendo were making profits but not nearly as high as Sony's.

@Parokki:
IF PS3 fails as in no profit made at all then the chances are Sony will COMPLETELY change their strategy and if that fails then they would leave gaming but before then i just dont see 1console slip up making Sony drop SCE all together.I think they will release another handheld because look at the success the PSP has had and is having the most successful handheld to go up against Nintendo thats some feat if you ask me or any one for that matter.If PS3 comes second in sales and makes reasonable profits then SCE will definately release PS4 because they can but they wont price it at $600 again that was their BIGGEST mistake in my eyes and some of the bragging they did but all companys do that.

@All:
People honestly think after 2 majorly successful consoles and 1 mediocre console at the moment and 1 strong handheld Sony is gonna drop SCE seriously that would 1.Make Sony look like cowards. 2.Lose investors. 3.Deface the company for dropping a part of it. 4.Lose the PUBLICS trust in Sony. 5.Piss off an AWFUL LOT of fans.

The main concern is that the PS3 may not be a mediocre console, that it may be a downright flop. That won't be determined for another year or so, after its power-hitter titles come out (and they will hit hard). I have no doubt Sony can bounce back from a mediocre console. I'm not so confident they can come back from a botched console attempt.

Nope. Sony is gonna make money on both in the end. Playstation Brand is too important to sony as a whole.