Summary
PS3 overpriced as a game system, underpriced as a Blue-Ray player
Analysis
Sony denied and refused to make price cuts for too long, and then the latest is too little and too late. By now the Wii is outselling them by 6:1 in some markets. A price cut may give it a dead-cat bounce, but probably isn't enough to revive it as a game system. Even with a 135% boost to sales, there was only a 15% boost to software sales. If I'm a game publisher that doesn't make me excited about making games for PS3, so I would continue to make games for other platforms and some PS2 games and that also run on the PS3.
When the PS3 came out it was selling basically as a cheaper alternative to a Blue-Ray player at about half the price. But unfortunately for game developers their games to console ratio of 0.95 meant that not everyone that bought a PS3 bought even a single game. It's gotten a little better since then, but no where near that of the other systems.
Think about a guy that can afford a $600, now $500 PS3. His girlfriend sees it as a waste of money. She could of bought a pair of Jimmy Choo's, which seems equally rediculous to the guy.
Nintendo has always priced their consoles right. If needed, they don't even have to lower their price, they can just bundle an additional game, besides the Wii Sports they already include.
Remember that Nintendo has to survive on the quality of their games. Sony has music, films, consumer electronics, studio electronics, and lots of other business segments to rely on. Nintendo is 100% games, but then they've started making card games back in 1889.
