Moreover, SCE Worldwide Studios president Phil Harrison stressed the importance of backwards compatibility last year in a GamePro interview. "Backwards compatibility, as you know from PlayStation One and PlayStation 2, is a core value of what we believe we should offer. And access to the library of content people have created, bought for themselves, and accumulated over the years is necessary to create a format. PlayStation is a format meaning that it transcends many devices -- PSOne, PS2, and now PS3," he said. He even went on to mock Xbox 360's limited backward compatibility with the original Xbox.

And yet just last week SCEE spokesperson Nick Sharples told GameDaily BIZ, "We have made clear on many occasions that our priority is on developing innovative new features and services for PS3 and not on backwards compatibility."

So the question must be asked: Considering the pure dominance of the PS2 and the millions of gamers who may want the ability to play PS2 games on the PS3 should they ever purchase the console when it comes down in price, is Sony shooting itself in the foot? GameDaily BIZ surveyed some of the top analysts to get their take.

The removal of the PS2 chip and other components in the 40GB model such as extra USB ports and memory card readers is certainly a cost savings measure, but how much does the PS2 chip really cost?

"Cost is hard to gauge, probably $30 - $50 per unit," Wedbush Morgan Securities' Michael Pachter said. "I thought lack of backward compatibility would hurt the Xbox [360], but it really didn't. My guess is that Sony has addressed the concerns of those who care about backward compatibility with all of the boxes sold to date, and that they will continue to offer the 80GB model if anybody feels that they need backward compatibility. So it's not fatal."

It's not an ideal solution, but something had to be done. "It's about cost reduction, but also getting people to focus on PS3 games. End of the day, they need to do something, and this was probably a compromise between costs and price cuts," UBS analyst Ben Schachter said.

That said, backwards compatibility is still a priority for many consumers, according to NPD industry analyst Anita Frazier. "When we surveyed consumers about the video games hardware system features that are most important to them, backwards compatibility was one of the highest ranked. As we've said before, this industry is all about content - and this is reflected in what features consumers tell us they want in a system," she said. "Backwards compatibility is one of the features that allow consumers to play the games they love, so it consistently ranks as one of the most desired features. Our latest survey which covered this subject, 'Next-Gen Functionality' showed that backward compatibility ranked second only to 'Has games I want to buy' in terms of desired features - nearly 70 percent said that it was an important feature to them whereas 90 percent said that the availability of enticing new games was important."

DFC Intelligence's David Cole isn't buying into the backwards compatibility argument, however. "I have always thought backwards compatibility is a bit overrated," he commented. "I think it is more important for a system like the Wii or the Xbox 360. That is because a lot of people NEVER bought a GameCube or an Xbox. With backwards compatibility you can argue that they can get two systems and catch up on the Halo, Zelda, Metroid, Mario titles they never tried. With the PS2 you assume that almost anyone interested in a PS3 already has a PS2. It is a very simple matter to hook two systems up to the TV."

For Cole, the bigger issue for Sony and its consumers remains the price barrier and the losses piling up in Sony's gaming division. "For me the big problem with the PS3 is high price. The problem is bringing the price down means bleeding a lot of money per unit. You lower the price $100 and you are losing $100 million for every million units sold. To me I just can't imagine many consumers stumbling over backwards compatibility. But I can imagine a whole bunch stumbling over price," he said.

Colin Sebastian, an analyst at Lazard Capital Markets, agrees wholeheartedly. "It appears that pricing is becoming more of a priority, which makes sense given where the PS3 is selling in terms of market share. I don't believe removing backwards compatibility is a huge deal, considering that most people who want to play PS2 games will continue to do so on their PS2s," he said.