According to a Reuters article, Sony's game division saw profits drop 40% in 2003/04. The major reason being dropping sales of its PS2 console and development costs for the PSP handheld and the PS3. Meanwhile, sales of the Xbox and GCN climbed, mainly due to their price cuts. It would seem time to make a similar price cut on the PS2.

Although it looks bad for Sony, it still dominates the market. Just because sales of the PS2 declined doesn't mean that it didn't out sell both the Xbox and GCN. And, granted, those two consoles did see a jump in sales but they weren't selling all that well anyway so the jump in sales is a bit overrated.

What I see in all of this, hopefully, is that the gap between the dominant PS2 and the Xbox/GCN is closing. All three are great consoles in their own right and it seems that gamers have room in their hearts for more than one console.