I should have been a little more precise. Consoles like the 3DO, Neo homecart and CD-I were generally received as niche systems or at least quickly became niche, they weren't planned as such (except the Neo homecart). That's something which will never happen to a Sony console, at least it's most unlikely at this point in time.
The Neo is a special case anyway. When the homecart system came out, its price was so high that SNK worked out a rental scheme because they couldn't believe anyone would actually buy such a high-priced video game system, but they were wrong, a lot of gamers went nuts about the possibility of playing arcade-perfect original versions of their fave games at home. Again, the initial price was not really an issue for those who knew what they were buying.
The thing is, SNK's old order always was arcade > home console, they never planned to come up with homecart-exclusive releases, so the homecart sys wasn't made with the mass market in mind but a niche of arcade gamers who could afford the price for arcade perfection in their living rooms. The NGCD that came out later on was planned to focus on the home market, but even with the cheap CD medium, the console never reached mass market status.
I agree, the high price of the PSP is a problem for Sony because they pretty much failed to give ppl a reason why they should buy a handheld with mediocre software support and run-of-the-mill multimedia features which many already have in their iPods, mobile phones or PDAs.
The UMD format is nonsense IMO, they just wanted to have something to recycle the tons of movie licenses with which they picked up during their last buying tour to the US and Europe, and then there's Sony Music with their insanely huge backcatalogue, etc.pp. In short, a total rip-off.
Nintendo's DS is ahead of the PSP because they made the right business decisions, they were wise enough not to shove yet another plays-games-videos-music-makes-coffe-and-diapers-your-baby type of system down peoples' throats with features they already have access to in one way or another.
However, I don't think the price is the only important factor here, the DS simply has the more clever and more transparent concept with better games that are attractive to the main audience of handhelds, read mostly younger folks who already owned other Nintendo handhelds before. I'm sure if the PSP had a few more killer apps, it would be more successful, despite its price.
Well, yes, I guess they have to find a balance between innovation and economic reality, or else they may end up with another PSP situation... on the other hand... something tells me all those hundreds of thousands of devout Sony fans will do their part in helping Sony to come out first in the console race again...
