This should be the next Playstation from Sony. The next Playstation should be a TV with the ability to stream game content ala OnLive.
Companies like OnLive have shown us that streaming games to remote devices is not only possible but plausible. The way we play games at home has changed dramatically since the Atari 2600, and OnLive's streaming game service is more in line with our modern practices. When we buy video games for our systems, the games rarely are finished, and we have to download patches for games that have been out one day. Further, we are a society that has grown accustomed to paying for and downloading games online.
Does anyone even care what kind of specs their new video game system has? Once upon a time, the differences between game system generations were obvious. The leap from 8-bit to 16-bit was a revalation. The introduction of disc-based media meant games could become huge, sprawling adventures. More recent innovations, however, have been less impressive. The marginal benefit is decreasing with each new generation of gaming hardware. That's why the PS2 continued to sell so well at a reduced price after the introduction of the PS3. So why are we racing even further down this path that is clearly leading to a dead end?
Make all the technological advances for gaming you want, Sony, and do the processing required for those advances in the cloud and just stream me the game. I will gladly pay a Playstation Plus subscription fee for streaming access to some games, and I will pay on a per-game basis for access to other premium games. I do the same thing with movies now, subscribing to Netflix and paying for individual movies on Vudu. Doing this will allow you to breath new life into your TV business and focus on software without the headache that is the hardware business. The best part is that anything Microsoft could do, you could do better because Microsoft's strategy of turning the Xbox into an entertainment center means they're just doing things people already expect smart TVs to do. You would have the smartest TV.