I've been a Playstation fan since the original PSX. I played the hell out of my PSX, I've done amazingly ridiculous things to my PS2, and I was salivating from day one about the prospect of the PS3.

But things change. The more I read about Sony and the PS3, the less faith I have that Sony is going to stay atop the gaming world and put out an economically viable system.

I still have no doubts that once all is said and done the PS3 will be the most powerful system on the market and the potential for the system is the best of all the next-gen systems, but that doesn't mean it will be the best option. Every story that comes out makes the PS3 sound worse and worse.

Simply put: Sony is trying to push a technology leap too soon. It's as simple as that. Sony is so hyped about Blu-ray discs that they had to throw that in the system even though there is no guarantee that it will become the dominant successor to DVD formats. On top of that Sony is so hyped about their Cell processor that they had to put that in the system, even though only 1 out of every 5 processors produced right now is functional and able to be used in commercial products. 1 chip out of every 5, and that is a generous estimate. Some estimates have it as low as 10%.

That means that Sony will be losing huge amounts of money on this launch. It is projected that each PS3 unit will cost Sony about $900 to produce and they will be sold for about $600. Production costs will drop next year as Sony switches to a smaller manufacturing process for the Cell, but it isn't as reliable, so what kind of yields will that have? 5%? It is traditional in the gaming world for a company to lose money on the hardware in order to push more software, but this is not a good outlook on software either.

The system is due out in November, but developers have yet to see a full release of the development package for the PS3. That means that programmers are creating games based on the potential, not the actual processing power of the system. That means that the first run of games will be far below the potential of the system, and it will probably take a few generations of games before the real killer apps start coming out. Basically, that means that the system will be out in November but there won't be any great games until next year some time.

The system is due to launch in November. In all likelihood there will be a huge shortage of systems until the Spring. There will be so few units available that people will gladly pay $600 or more to be one of the few with a PS3, but once the manufacturing catches up with the demand and you get into the working class market, how many people out there will be willing to spend $600 on a gaming system with an unproven media format? Especially since they could get an Xbox 360 and a Nintendo Wii for the same price.
And because of the horrible chip yields, it doesn't look like Sony will be able to make the price cuts next year to keep them competitive.

I hope I'm wrong on all this, but it certainly doesn't look good.