1. Disruption products are often seen as inferior not always. The PSEye retails for 39.99 making it the same price as a Wii Remote excluding the nunchuck. Not so sure about the comparative revenue made, but i doubt they are making a loss on every PSEye sold.  Sony is going to build the PS4 around it .  The PS3 will however begin to focus in that direction for preperation and if PS4 is backwards compatable then they have existing software that works well with it from launch.

2. Even if they did beat Sony out not having a profitable business in the living room would be a shitty position for them.

3. With almost 20m consoles sold it would still be a year to 18 months before we saw the ramifications of developers not releasing ps3 games as it still makes sense to do so while those console owners have yet to purchase a new system and I doubt that 0 PS3s will be sold this year.  Lower sales does bring them closer to profitability while they lower costs for a price cut come late in the year as I don't see software sales dropping immediately.

4. Classic controller.  It works for the Wii core players I don't see why it wouldn't here.  Plenty of core gamers enjoy the Wii as well. Plus Sony will still be making core games as well.  Nintendo didn't stop.

5. If i'm not mistaken they have broken a million already and once the PS3 price lowers and they move to digital distribution I see them garnering even more.  Especially when they can re-advertise their software via normal avenues (TV internet) and home. 299.99 PS3 with one controller pseye, and Singstar or Eyepet might help out sales when having large sales is viable because they aren't selling at a loss.

1. The PSEye could work, but it has a great chance of failing. Sony is not an integrated Software/hardware company. They can not compete with Nintendo in their game design, being they will always be one step behind. Possible, but I don't see it happening.
2. You right that it would, but they are not there for a profitable business and don't care about the living room. Really, they are out of their element in that regard. It's really to fend off Sony.
3. Having the console sit stagnant will take them momentum away, which could make software sales slow. A big reason to have more units sold is to get the royalties from the software and accessories. Either way, SCE is in a big pickle.
4. Your a little lost there. The Classic controller is simply for the VC. Besides this, Nintendo has released many other disruptive accessories such as the Wii Wheel and the Balance Board. The PS3 simply can't crack the expanded market. It has far too many games that will not appeal to them and very few that would. In the PS4 was based around the disruptive device and they remove the brand "Play Station" then there is hope. Right now, there isn't any. Of course, Nintendo is making "core" games for their core, but this is different then Sony's core. Nintendo is able to translate some. Mario Kart, for instance, is one that reaches both the core and the expanded market. Sony's core games are "Next Generation" not "New Generation" They can't compete in Nintendo's turf.
5. I did say it could. Of course, they could be expanded audience games (if we are to use that term), but they will have little push becuase of the PS3. People also said LBP would be a brige game (it wasn't anyway, but let's humor them). It did nothing to bridge anything. It is on the wrong system. You idea won't work becuase Sony's advertising, brand and library are not to New generation stadards. Nintendo totally changed their business model. Even if Sony could compete, they definatly do not have the ball in their court. Remember, typically the disruptor wins.

they could close Sony's audio department, not music, but audio like car audio, radios, etc.

@Smashchu2

1. And most saw Nintendo becoming software only after this gen. Sales on the PS2 of titles like SingStar show me that they can capture that market in big enough ways.  They just need to not abandon it this time. Or alienate it via price. I believe they learned their lesson there and over time price will be less of an issue.

3. Slow doesn't mean stop and if all they have to do is sell enough software to remain profitable until late 09 when they can "relaunch" the PS3 with a new image kinda like M$ did this year.  Lower price point(hopefully profitable by q3), big releases, decent advertising which i think they could pull it off. 

4. I know plenty of core gamers who enjoy the Wii with GC controllers and Classic controllers for most of their play time.  All PSEYE would need is one must have title.  I'm not sure it's ET: pet, but I'm sure sony London will come up with something.  They are actually quite good at casual software.  I'm really interested to see where things like Eye toy story and what not go. As well as redone sequels to already done eyetoy titles that haven't gotten sequels or next gen revisions yet(ET: Kinetic 2 might find an audience, ET: Play,ET: Groove, ET: Edukids, ET:Play Sports, ET: Antigrav, ET: kinetic Fight ) and integration of neat features into some core games to help drive adoption.

5.  I've posted some videos before that i believe show Sony does have New Gen Advertising somewhere in their blood.  With a new focus on marketing and software(from the mouth Stringer himself) I think that's where they are headed.  Do I believe they will beat the Wii? Hell no, but I do think they can make PS3 not a total disaster and set a decent stage for the Next Gen when it finally rolls around.  And since they would theoretically be profitable they wont have to beat anyone just do a good job. 

@Nitecrawler: What if Stringer means that Sony is going 3rd party? Their current projects could see ports to PC and 360 with relatively low cost.

It's certainly possible. I just don't see why they would want to when they will probably be at profitability in SCE for Q4 08 and probably beyond. PS3 sold more hardware and less games last season at a larger loss and maintained profitability for the quarter. With HW down and SW up seems like they are in good for now and with blockbusters right around the quarter and intermittently for the rest of 09.

I took the less focus on hardware to mean we are not driving ourselves into bankrupcy by trying to be competetive price wise until that's feasible.  But like I said it's certainly possible.

@Nitecrawler: But also the PS2 and PSP sales were down, which contribute a lot to the profits. After their Q3 financials come out, there's no need to speculate anymore.
Anyway, it's not just about profits, but profit margins too.

Sony isn't all fine and dandy, but they are not going to close the PlayStation division.

I imagine Sony Ericsson would be the first to get the axe. And hopefully, the ONLY one to get the axe. SCE won't be closed down, not with all the work they're doing and all the work they've put in, but they may sell off a few subpar studios, like Evolution (face it, they're subpar. Pacific Rift's sales are not impressive, compared to other Sony first party games)

I actually hope Sony Ericsson wont be hit too hard, I just ordered a new Sony Ericsson, and it is my favorite phone brand.

And Pacific Rift is a good game, which sales do not always dictate, and so far Pacific Rift is still selling decently.

I doubt that Sony can just axe Sony Ericsson, because Sony is only co-owner in SE. Sony can't just terminate SE without Ericssons approval. Also big part of SE operations is outside Japan.

Big games like GT5 can sell well, but if you consider how huge project it has been it's possible it will never bring any profit to SCE if they keep it exclusive to PS3. If Sony brings GT and GoW series and other exclusives to PC like MS does, it could sell almost twice as much games it would sell only in PS3.