I agree that Sony should have some kind of much more solid strategy than they've revealed to date to keep the PS3 relevant. Google TV, Roku, Apple TV, Hulu, Netflix.. Sony should be competing heavily in that space with their console, and a competent browser with HTML5 and Flash video would go a long way toward supporting that.
If Sony could host the android user-space on top of the PS3, it might be to their advantage, but it's not clear that anyone has separatead the Dalvik runtime and class libraries from the Android Linux kernel.
They can do it in 2 stages. First, build their own environment on top of XML and REST APIs. NetFlix, Hulu, Google Search, GoogleTV Search, and the new FaceBook API, etc. can be done this way. Then, have a full HTML5 run-time to round up the UI. Such presentation layer allows them to unify the the UI and user experience. We know the first stage is already being done. The question is will they follow through to the second stage.
Having a truly first class HTML 5 environment with accelerated JavaScript and full codec support along with local caching and GPU accelerated canvas would allow the PS3 to fight in the same space as the other streaming video boxes, but Sony just hasn't shown any public sign of being highly motivated in that area so far.
I hope they are. Heck, if Sony decided to produce a $149 PS3 with no Blu-Ray drive or hard drive and sold it as a streaming video solution that could also play PSN games, they'd have something that Apple couldn't easily compete with.
In some sense, they already are. Sony will reveal their GoogleTV settop box next week. But it will have Blu-ray. It is unlikely to be $149 though (since Logitech Revue costs $299 without Blu-ray). As for the PS3 portion, there is indeed a conflict in business model. Then again, if they don't do it to themselves and find a way to evolve their business, their competition will gladly do so within a few years. I don't see how they can stay put. Either way, they will be changed.
The catch-22 for Sony is that if they provide a decent browser, they lose control of the platform - you no longer need to pay Sony a tithe to get a game or app onto the PS3. As a consumer I am all for it (and already own 2 PS3s) but Sony has demonstrated over and over throughout their history that they are highly reluctant to go with open and / or more popular 3rd party protocols and infrastructure (Beta, Atrac, MemoryStick, Hi-8, etc.)
Well... Sony also pushed Blu-ray, Qriocity (DECE), standardized Stereoscopic 3D, adopted OpenGL, etc. I don't think it's fair to say they are reluctant to go open.
The Playstation platform will have to prove its worth over the social games. As long as they can keep consumers' eyeballs to their screens and boxes, they should be able to find a way to make $$$. The question is how to structure the relationships with Google, Steam, etc. If they can't unify and define their own user environment, then they are doomed to be marginalized yet again.
So far, they have done well in Blu-ray. Qriocity looks like another new platform approach. If they can position themselves to take advantage of on-going trends, they should be able to stay relevant. But they may need the user experience/environment piece to break out.