This is an indication that the situation inside Sony is worse then it looks from the outside.
This article is somehow remiscent to an earlier account of another Game System father.
Gumpei Yokoi. You may know him as the father of Game and Watch, Gameboy, Metroid and the ill fated Virtual Boy.

Eventhough he was key in the many successes Nintendo achieved in Electronic Gaming ( He was the one that spearheaded Nintendo from a Play Card making Company to the Electronic Gaming Giant it is Today ).

In the same way Mr. Kutaragi turned Sony from a Media Company to a Media / Toy Company and made profits too. Sony Playstation accounted for up to 40% of the Company's income at the hight of it's Popularity.

Gumpei Yokoi was also "Sidelined" just like Kutaragi when they created something that brought their Company in the Red.
Gumpei Contribution was Virtual Boy. Just like Sony PS3 an Over Ambitious Project. And not suprisingly it Bombed in the market.

The PS3 is not a Total failure ( Marketwise ) but it Threathens to do Permanent damage to Sony financial status. Even if they outproduce Wii. The PS3 Problem is that the more you produce to more your Losses stack up since Production is Higher then selling price. The way I see it is that Mr. Kutaragi dragged Sony into a spot where it is an almost no win situation.
( This is Serious. The Playstation 3 brought Sony in a Very Dangerous Financial Position The only things the The Sony bosses can do is Pray that not another of their gadget fails which results in another massive recall like that of the faulty ion battery recall not long ago. They can't buffer the losses. )

And that is why he like Gumpei got Formally released from their Position. but Informally FIRED. The same here with the Father of Playstation.

Japanese know no Pardon with failure even if your success accounted 100fold beforehand.

And another thing. The age of the Eyecandy of Sony Playstation system is over.
The Playstation 4 is already focussing on Network as main objective. Sony doesn't have the fanacial backing anymore the develop a second to none Graphic oriented Multimedia System. PS3 was developed with the Funds Generated with the succes of PS2 and PS2 with the success of PSone
My prediction is that PS4 might work with PS3 Hardware to save development costs.

C'mon common sense. If you were a Businessman would you do the same gamble twice if it turned out bad the first time?

This is Badnews for the Graphic Whoring Playstation Fanbois.
( Note that I'm not Implying that ALL Playstation Fanboys are Graphic Whores ).