Every kid under 12 of every colleague I have has a DS. I'm the only one with a PSP. For my 1 year old (almost 2), the PSP is used for movies (it can lock the keys during playback, which is essential
and it is surprsingly robust, having fallen on the floor countless of times and into water once).
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there lies the crux of the issue. demographics! both the psp and Ds are easily piratable. Why then does the psp seem crippled by it and the DS is not has simply to do with the target audience.
Almost everyone i know who owns a psp is with the 13-19 year old age. And they are all male. In essence they are people who know their tech easily. And incidently all of them have CFW. The psp suffers because it's audience are mostly tech literate who know how to pirate stuff.
Whereas the DS audience has little kids and soccer moms who usually don't jailbreak their stuff. hence why nintendo enjoys massive software sales for it's DS. That's why i believe sony made a mistake when they designed the psp go. They should have made a portable that fits with a larger audience instead of hardcore gamers.
When you compare the ps1 and ps2 both which are massively successful consoles but also suffered from huge piracy levels, people often question why haven't software sales stagnated like the psp. Again it comes to demographics and marketshare. The first 2 sony consoles had a huge marketshare upto 65-70%. This meant that the large audience both consoles catered to has offsetted whatever losses incurred from piracy.
In other words damage from piracy was offset by a huge marketshare and huge target audience. And this is why the dreamcast failed. It was a console for hardcore gamers and when it has become easily piratable, software sales has sunk to the bottom. The lossess finally caught up to sega. Sega didn't also have the luxury of selling it's dreamcast as a DVD player as well.
If the dreamcast had enough marketshare and audience then it would have thrived and Sega would still be a hardware company.
When you came to the ps3 case, it caters to primarily a hardcore audience. It still sells for a loss. So when news arrived about an exploit via linux, panic bells rang at Sony HQ. Sony has been burned by the massive piracy levels on the psp. So it was no brainer that they scrambled immediately. Now if linux was a program used by the majority of ps3 owners then i think Sony would have attempted a patch.
But because of minuscule amount of ps3 owners who have installed linux, coupled with the fact that such patches would take resources and time and facing a cat and mouse game with hackers, Sony simply saw fit to simply remove the whole thing together. In the end the cost outweighed any benefits.
At this point in time, the ps3's marketshare is not big enough to offset piracy levels like it's predecessors. Sony knows this and this is another reason why they are after nintendo's market with the Move. They need that casual audience they had under the ps2. Once you enjoy that balance between catering to both hardcore and casual market, then the console flourishes both from a hardware and software perspective