"PS3, It's probably too cheap." ,says Sony

If you can have an amazing experience, we believe price is not a problem.

and drinking a gallon of hot lava is also not a problem.

This is pretty much what was said about the 3DO console and the Neo Geo: super expensive but "gamers seeking that extra thing" will pay for it.

And they did but not enough for Panasonic or SNK to make a bona fide hit out of either one. The Neo Geo ended up as a niche product and the 3DO was basically forgotten.

Playstation wasn't as good as 3DO or Neo Geo but was good enough and was cheaper. This time the 360 apparently looks about as good, is cheaper, and you can go get one now. The only thing Sony has going for it are proprietary games but they're not talking about that. They more interested in telling you to just pay extra and be happy you can. That works for Apple. And Hummer. Nobody else.

I think the blue-ray drive is the one thing the can do without. That alone could probably bring the price down $100 or more.

Also you think that Sony would of learn from the past. The successfully out sold PlayStation from the Dreamcast, N64. They also out sold PlayStation 2 from Gamecube and Xbox. All of these consoles were graphically superior then their PlayStation consoles. Killer apps sell a console, not graphics.

next generation graphics and various services via the network

How is that next-generation? Sony's living in the past.