MGS4 sells 1 million in the US, but only after 7 months.

Seriously? If its taking the biggest exclusives on the PS3 7 months to hit a million(in the US), there are problems. Large exclusives on the 360 are selling millions in the first month(days/weeks in most cases). Even multiplatform games are typically double, with games like CoD, Fallout, and GTA selling more on 360. PSP games arent selling, PS3 games arent selling. Now I cant say if the PSP is hardware profitable or not, but they definately need the software revenue to support the PS3.

On the non-gaming side, theyre TV division is having its ass kicked by better(Samsung, though I love my WEGA) and cheaper(Vizio) alternatives. Add in the fact that Blu Ray isnt anywhere near mass-market, and digital distribution and pirating lowering demand for physical discs in general.

So, with the terrible economy, and Sony trailing in almost every department, does anyone think it will even be possible for them to recover and be the power-house they once were?