Analysts at Wedbush Morgan Securities are saying that Sony could delay the PS3 into 2007, if the right market conditions allow for them to do so. What constitutes the right conditions? First, Sony needs to score a direct hit on the Xbox 360 launch by making the PS2 more attractive.

We believe that the company will attempt to disrupt the Xbox 360 launch with a price cut, and as a result may succeed in diverting attention away from the higher priced next generation console. We expect the Microsoft to attempt to engineer the Xbox 360 to be compatible with the current generation Xbox, and as a result, believe that Microsoft will maintain $149 pricing for its money-losing hardware..'