Very Interesting stuff, Nice Post NJ5.
Ask yourself a hypothetical.
If you had money to spend- which console would you buy- as a consumer.

If there was a company making a gaming console that costs so much, and delivering it to the consumer for only $400, that would be crazy.

Sony is here, making the PS3, losing money on it when you don't buy it, but loosing even more money when you do buy it. Wow - that seems like devotion to the Video Gaming consumer if you ask me. But that is only my opinion.

I'm going to buy a Wii for sure, and I'm considering buying a 360 together with it (but I probably won't, since I've always been a PC guy). A PS3 is more or less out of the question for me now, since its exclusive games are either not attractive for me, or have good counterparts in the other consoles - the only one which could attract me is MGS4, but I'm not so interested in that series...

I'm not interested in Blu-Ray, since it's not definitive that it will win the format war, and I don't want to end up with a useless HD optical disc player. So if I buy a PS3, it will either be to play with the Cell (I'm a programmer), or when it's $300 at most, and with the condition that I'm interested in the Blu-Ray player. It's not likely that I will do so anyway.

Regarding your last paragraph... Sony is a business, they aren't doing this as a charity! They have a good brand (Playstation means games for many people), and they're trying to save that brand after their many mistakes, the first of which was to produce such an expensive console, and the second of which was to delay it so much! Delays caused lower customer acceptance, less time to reduce manufacturing costs, etc... As long as Sony's games division gets the money to continue driving the PS3, they will do so! The question is if Sony as a company is interested enough in the Playstation brand to drive the PS3, knowing that it will cost them dearly in terms of money.

Well with a $399 price tag I'll defiantly pick one up come 2009 when Final Fantasy XIII comes out, Should be even cheaper by then.

I was on the fence about getting one for FFXIII, as much as I love FF I wasn't ready to drop $499+ on the system. But $399 or less I could deal with.

That's not devotion to the consumer, slick. That's devotion to market share. They aren't doing it because they love gamers, they just don't want 3rd parties to abandon them.

So, this going to spark the rebirth of the "PSWii" movement? Good move, it will sell you a few more systems, thats for sure. But is it too late?

Ive used up 15 gigs.

I have 6 200mb trailers in 1080p

FLow

Medievil ps1

Tekken 5

and alot game saves, as well as some 20 songs. And about 40 pics.

You are right. And bottom line is they don't want PS3 to be a bust in the long run I get it.

But why dont they want to loose the 3rd parties? (other than the obvious $ reason) -So people buy the console.

Reguardless of their plan or rationale, it still is sweet for the consumer (at $400)

Wow, that's alot. I've only used like... less than 5 gigs. 

With mp4 movies (mr and Mrs smith, Joe Dirt, family guy movie, day after tomorrow, office space, some simpsons and south park episodes), Flow, calling all cars, Warhawk downloaded from the PSN, GTHD, LocoRoco, and a whole bunch of demos, game trailers, music, and pictures, as well as 10 gigs partitioned for Linux, I have managed to use all but 24 of the 60 gigs on my PS3. Kinda pathetic

 How do you know that as fact?  I found a magazine of mine that had the info from isupply that broke down the costs as of July for the 60gb version.  The console in the parts they named and stripped down came to a cost of about $640.  That was the 60gb version, and just the console only.  Strip out a few pieces, costs of components are driven down further with improved manufacting costs, and it's down from that price estimate.  (it still was pricing the BR drive at about $110 and it has gone down since then and was going by standard component prices, not taking into effect of mass producing or buying in massive quantities. )  Chances are, the $460 could be realistic.