Yes, you are right, the Blu-ray aspect of it is what I was saying with the "kill tooo many birds with one stone" comment. They are not only trying to repeat the success of the PS2 here (or are they?), they are also trying to become the owner of the dominant optical disc technology for the next ten years, not to mention keeping Microsoft out of the home. Microsoft getting a foothold into home electronics would be a total disaster for Sony and other major consumer electronics manufacturers, as it would require them to start paying money to Microsoft for Windows in the future.
Does anyone really think that Microsoft are in this business of making hardware for the longer term? Of course they are not (it's far too risky and expensive). They are simply using this as a tool (and are taking a very large financial hit doing so) to get Windows into consumer electronics (the next XBox will run Vista). Once that is achieved, there will be no more XBoxes, but devices produced by a myriad of manufacturers running Windows (yes, they even want your TV and your fridge to be running Windows or some form of it), it's very 3DO and MSX in a way.
This is the Microsoft plan. They need to get rid of Sony and Nintendo first however, because the first thing is the box. Regarding Nintendo, I think that this is their penultimate foray into a home box type of system and they will from Wii2 move exclusively into the hand held market (they simply do not have the resources to compete past this last song), but even there Microsoft is pushing and pushing.
What Sony does have in its favour on this issue however is not only its huge manufacturing power (ability to cost reduce, share production lines to reduce cost, etc.) and also its brand name (even that hasn't always worked in their favour, but still the majority do relate their name with quality products), but also Blu-Ray (if it wins), and a current PS3 architecture that will cost them very very little to take forward to PS4. I'm not just talking very little here in terms of economic cost of both production and design, but also developer familiarity. The PS4 will use the same architecture as PS3 but simply with more Cells (updated ones of course, but IBM is responsible for that) and memory, wider buses, and with another "off the shelf" Nvidia GPU. It will cost them peanuts in relation to what the PS3 cost to develop and will probably run PS3 titles without hardly any intervention.
I think that Sony knows this, and they see PS3 as being a stop-gap, or rather an entry level machine into a line of machines. The problem ATM is that it's great to have XBox360 and PS3, HD-DVD and Blu-Ray, but very few people (mass market) currently have the TV sets to benefit from them. This is where Nintendo sort of got it right, if people say that the PS3 is selling badly, then considering the start the XB360 had, it's doing worse, and probably will not have as long a life span. People call this "next gen". I don't think it is. It's a marker, nothing more. Having consoles that can output HD level graphics is one thing; people having the display hardware to take advantage of it is another. Both HD-DVD and Blu-ray both have this problem ATM as well, and I expect it will take 2-3 years before is truly becomes mainstream. We will know when that happens when HD-DVD and Blu-Ray disc sales eclipse normal DVD sales.
Sony is in a funny position here, and a position that Microsoft do not find themselves in, that Sony could in theory produce a PS3.5. When the PS3 becomes "affordable", they could simply add an extra unit with say an added Cell or two. A two Cell unit would be much more powerful, yet allow developers to produce games that run on both units, the PS3 and the PS3.5. Various papers have shown that a Cell processor in certain circumstances can live with a Nvidia 7800 GTX on its own. Microsoft cannot do this. Some laugh at this concept, but it's not that much different to how the PC World finds itself, where software will run from a basic machine, but add extra features the more powerful the machine becomes.
This could be one explanation why they have seemed to be so blasé about the whole thing, being late, the price, etc. if it's not sheer cockiness. Did the games division really decide to go with Blu-ray, or were they forced to do so by their masters at Sony Electronics Inc.? Sony Electronics are the ones that need to sell HDTVs and get their optical disc format in the dominant position, does it matter if they use Sony Computer Enetertainment as their conduit to do so early on. Of course, I'm not writing the PS3 off, there is too far to go for that, but if it does not become the dominant console, it is Blu-Ray and 1080p (this is the "Full HD" marketing bullet point of Sony Electronics) that will be seen to have been the problem. If it was entirely up to SCE, surely they would have dropped Blu-ray and used a dirt cheap DVD drive to keep them on launch, they could have dropped native 1080p support and gone for a cheap scaler chip to support 1080p like the XB360 does. As said however, Sony Electronics could have known that this current set of consoles will not sell the same amounts as the previous set due to lack of high definition displays in the home, and that the next Playstation will cost relatively little to develop as it simply scales the PS3 architecture upwards.
Does anyone really think that Microsoft are in this business of making hardware for the longer term? Of course they are not (it's far too risky and expensive). They are simply using this as a tool (and are taking a very large financial hit doing so) to get Windows into consumer electronics (the next XBox will run Vista). Once that is achieved, there will be no more XBoxes, but devices produced by a myriad of manufacturers running Windows (yes, they even want your TV and your fridge to be running Windows or some form of it), it's very 3DO and MSX in a way.
This is the Microsoft plan. They need to get rid of Sony and Nintendo first however, because the first thing is the box. Regarding Nintendo, I think that this is their penultimate foray into a home box type of system and they will from Wii2 move exclusively into the hand held market (they simply do not have the resources to compete past this last song), but even there Microsoft is pushing and pushing.
What Sony does have in its favour on this issue however is not only its huge manufacturing power (ability to cost reduce, share production lines to reduce cost, etc.) and also its brand name (even that hasn't always worked in their favour, but still the majority do relate their name with quality products), but also Blu-Ray (if it wins), and a current PS3 architecture that will cost them very very little to take forward to PS4. I'm not just talking very little here in terms of economic cost of both production and design, but also developer familiarity. The PS4 will use the same architecture as PS3 but simply with more Cells (updated ones of course, but IBM is responsible for that) and memory, wider buses, and with another "off the shelf" Nvidia GPU. It will cost them peanuts in relation to what the PS3 cost to develop and will probably run PS3 titles without hardly any intervention.
I think that Sony knows this, and they see PS3 as being a stop-gap, or rather an entry level machine into a line of machines. The problem ATM is that it's great to have XBox360 and PS3, HD-DVD and Blu-Ray, but very few people (mass market) currently have the TV sets to benefit from them. This is where Nintendo sort of got it right, if people say that the PS3 is selling badly, then considering the start the XB360 had, it's doing worse, and probably will not have as long a life span. People call this "next gen". I don't think it is. It's a marker, nothing more. Having consoles that can output HD level graphics is one thing; people having the display hardware to take advantage of it is another. Both HD-DVD and Blu-ray both have this problem ATM as well, and I expect it will take 2-3 years before is truly becomes mainstream. We will know when that happens when HD-DVD and Blu-Ray disc sales eclipse normal DVD sales.
Sony is in a funny position here, and a position that Microsoft do not find themselves in, that Sony could in theory produce a PS3.5. When the PS3 becomes "affordable", they could simply add an extra unit with say an added Cell or two. A two Cell unit would be much more powerful, yet allow developers to produce games that run on both units, the PS3 and the PS3.5. Various papers have shown that a Cell processor in certain circumstances can live with a Nvidia 7800 GTX on its own. Microsoft cannot do this. Some laugh at this concept, but it's not that much different to how the PC World finds itself, where software will run from a basic machine, but add extra features the more powerful the machine becomes.
This could be one explanation why they have seemed to be so blasé about the whole thing, being late, the price, etc. if it's not sheer cockiness. Did the games division really decide to go with Blu-ray, or were they forced to do so by their masters at Sony Electronics Inc.? Sony Electronics are the ones that need to sell HDTVs and get their optical disc format in the dominant position, does it matter if they use Sony Computer Enetertainment as their conduit to do so early on. Of course, I'm not writing the PS3 off, there is too far to go for that, but if it does not become the dominant console, it is Blu-Ray and 1080p (this is the "Full HD" marketing bullet point of Sony Electronics) that will be seen to have been the problem. If it was entirely up to SCE, surely they would have dropped Blu-ray and used a dirt cheap DVD drive to keep them on launch, they could have dropped native 1080p support and gone for a cheap scaler chip to support 1080p like the XB360 does. As said however, Sony Electronics could have known that this current set of consoles will not sell the same amounts as the previous set due to lack of high definition displays in the home, and that the next Playstation will cost relatively little to develop as it simply scales the PS3 architecture upwards.