If you overshoot demand too much, and produce a massive surplus, you end up in the ugly position of having to stop production of your console (often temporarily). From a PR perspective this is a terrible event because it sounds like your system is dying and from an engineering perspective this is awful because this means no (new) cost saving measures can be put into the system. Essentially, if Sony is not careful they could find themselves getting press in 6 to 9 months that the "PS3 is DOA" while not being able to adress the biggest problem with the PS3 (its price) without taking a massive loss.

 Not true.

My friend has a PS3 which stopped working after 3 weeks. They replaced it with a new one. So according to your argumentation this is 2 sold units. In reality it's only 1.

It's not to inflate their sales numbers. If they sell it to retailers it's money in the pockets of Sony. That doesn't mean its bought by costumers, but that's the retailers problem not Sony's (in the end of course it will be Sony's problem, since retailers will not order more units, but not directly).

So Sony is absolutely in its right to mention the amount of units they sold to retailers, cause that's where Sony gets its money from. 

Yeah!! It's nice to have new members who understand the difference between sold and shipped.

Do you work for Sony per chance? 

BengaBenga,
You didn't get it right. Up until April 07 Sony used to publish production numbers. Those units were not even sold to retail, they had just left the factory. You can look that up for yourself in the financial reports on sony.net. Since April 07 they have started to include actual sold-to-retail figures, like Microsoft and Nintendo have done for a long time.

None of the 3 companies publishes sold-to-consumer figures except when commenting on NPD et al.

I think we need to be fair to Sony on this one though. Everyone, including Sony and most people here, expected Sony to sell as many consoles to retail as they could produce, at least during the first 6 months. Hence it would not have made any difference. Once Sony realized this did not happen, they changed their numbers from produced to sold-to-retail.

I just honestly don't know how they can do this...

The PS3 would have to outsell what the Wii did last year by a considerable margin to make 11 Million between April '07 and March '08.

People are starting to make their Christmas buying decisions, and for a good portion of the ones who want to purchase a gaming console, PS3 is not the highest option on that list.