Analyst at RW Baird, Colin Sebastian, has said that he believes Sony needs to drastically cut the price of its current generation PS3 console in order to stay competitive, as well as pushing the PlayStation Orbis to market before its main next-gen competitor: Microsoft's Xbox 720.
"In many areas of its business, it is losing share, such as TVs and computers, and its challenges are well known in gaming," he said. "The need to invest in a significant upgrade cycle for Orbis/PS4 comes at an awkward time for Sony, but to remain competitive longer term in games, we think there needs to be another price reduction on the PS3, and then be first to market with a next generation console."
While it seems incredibly unlikely that either Microsoft or Sony will be able to beat Nintendo to market, with the Wii U expected to be released towards the end of 2012, the new Nintendo machine is considered less of a next-gen system and more like the original Wii - something to take gaming in a new direction, with the focus likely to be on the touch screen interface.
Sebastian also warned against competition from other angles, including Apple TV and similar Android powered televisions allowing for simple social and mobile style gaming in the lounge - where consoles currently dominate.
Sony has gone through a lot of upheaval recently. There's a new CEO, new head of Sony Entertainment and the new big man Mr Hirai has said that he plans to take the electronics arm of the business in hand.
Source: Games Industry