[quote name='Richard Kain']If ...[/QUOTE]
I think the Go has more in common with the GBA Micro than other GameBoy models. Smaller size, tiny screen, different design and less features.
I don't disagree with your assessment: IF the Go is successful, THEN it will replace the current model. I don't have a lot of confidence in Sony pulling this off. I already wrote my piece about piracy, and it is not necessary to repeat my post.
Even with the change in product delivery, profit margins may not actually be better. Although, digital distribution should help cut costs. I will agree with parts of your statement, but the conclusion of higher profit margins is not inevitable.
The DRM paragraph is from fairy tale land.
[quote name='lord_ebonstone']Sony still hasn't learned that the way out of a hole isn't to keep digging.
More SKUs = customer confusion = "

this, I'll just get a Wii."[/QUOTE]
Sony has proven its in a trough. They are in N64 and GameCube territory. Another major slip (PS4 or whatever) will put them in Sega land. Or, the next generation could bring them great success and all of this will be a distant memory.
I do know the Go is not the answer. Sony is hoping to use this model as a stepping stone for PSP2. I'm not against the move, but I'm not confident they can effectively execute the strategy. Aside from their marketing ability ineptitude, I don't like the product features. In the last few years, they have shown a lot of incompetence and arrogance (even more than MS). IMO, Sony is not responding well to most consumer complaints regarding the system.
On a related issue, nobody here has mentioned the influx of bandwidth restrictions by internet providers.