Wired News thinks that Sony is in fairly deep trouble - the electronics division is on a decade long slide, and they are hoping that the PS3 will reverse that. The trouble is, the $600 price tag (as I've mentioned many times before) is not the way there.
Based on this article, I think Sony has a positioning problem: they are marketing a game system, but they have far larger (and mostly invisible) plans for the PS3:
The PS3 is much more than a game box. Kutaragi likes to say it's actually a computer, one that's designed to lie at the center of the networked home, serving up films, navigating the Internet, doing nearly everything a PC can do, and delivering jaw-dropping videogames besides. The new console relies on two extremely ambitious yet untested technologies. At its core is a highly sophisticated microchip that can cruise at teraflop speeds (equal to the fastest supercomputers of less than a decade ago) and that might someday revolutionize home electronics. Also built into the machine is Sony's new Blu-ray hi-def disc player, which is proudly incompatible with a rival format from Toshiba and which represents a bold, some would say reckless, attempt to control the multibillion-dollar market in next-generation video discs.
Well, that might explain why Sony thinks that the $600 price tag is reasonable. The problem here is one of branding: Sony, whether it likes it or not, is selling game consoles, not home media centers. The market for home media centers of this sort isn't even proven - Microsoft thought they could sell Media Center PCs into the living room, and it hasn't worked. People like well made, single purpose devices (like Tivo). They don't want their DVR to crash because the latest IE patch failed.
I documented the exciting process of setting up a Media Center PC (and that didn't even cover HD - I'm sure that adds to the fun) awhile back, and it wasn't easy. When people buy a game system, they aren't really expecting to have configuration issues. Maybe Sony has something that will solve that, but they sure haven't told anyone. The PS3 is being pushed as a next gen console, not as a multi-purpose device. As a multi-purpose device, the $600 tag might work. As a game console, it's just laughable.
Update: Scoble makes a point involving HD TVs:
I guess it depends how many people will buy $4,000 TVs over the next year. If you get one of those you’ll probably open a credit account. Then $600 more isn’t really that big a deal since that’ll probably cost you another $20 a month. At least that’s how I bought my Xbox and my HD-DVD. Best Buy gave me $10,000 worth of credit by filling out a simple form. Oh, yeah, sorry to pop everyone’s bubble that I’m one rich dude. It’s the American way: go into debt for your toys.
Well, I still say this: At $600, you hit "conversation with the spouse" territory in a lot of households. I'm also not sure how many people will spend $4k on a TV. We bought an HD capable TV (i.e., no tuner) 2 years ago for less than $2k. There is simply no way I'd spend $4k on a TV - especially when only a small fraction of the available channels are HD.