This is a very
good article on where Sony went wrong and missed the boat with UMD and PSP marketing etc. I believe they could have forged ahead and beaten Apple iTunes online store with regards to selling video and music (and both) with Sony's large user base.
It'll be interesting to see whether they make the same mistakes with the PS3 too. I mean the Xbox 360 is out now and I'm sure they'll be big disadvantage to being late to that party!
I'm still unsure why people aren't purchasing the PSP as a MP3 player as well as a movie player and handheld console. It's just not been marketed as a iPod on steriods properly. It may be a bit bigger, but I know people who've bought one as well as an iPod! Seems a bit crazy to me. How expensive are these memory sticks now? Another big mistake from Sony to go propriortory! First Memory Stick and now UMD...