'The Cell processor has reportedly cost Sony around $1.7 billion so far.'

The thing is IF Sony had chosen the same CPU as the 360 then they would have had more time getting a better GPU meaning that pretty much the 360 and PS3 would have been on par in graphics and games then the PS3's only true advantage would have been the blu-ray.

Which then means as much as I hate to say it...Sony would probably be leading a lot stronger...But then they dont have a well intergrated online like Xbox Live...

Anyways hopefully Sony has learnt from this gen.

Ohh dear not another failure from Sony... Betamax, Super Audio CD, Mini Disc, UMD, now The Cell......wots next?, anyone dare to hazard a guess?? hahahaha....brilliant.

All this news says is that Sony are getting out of the business of processor design and manufacture. This is part of their current outgoing strategy of concentrating on core businesses.
It does not mean that Sony have given up on Cell, or are going to stop using it. They still have to buy and use processors. PS4, if it ever comes out, will probably be Cell.

I agree with "Bruce Everiss". There's no indication in this news release or ANYWHERE else that Sony is pulling out of USING the Cell BE processor.

They're merely focussing on core business and it's not unusual for a corporation to work on producing something, to make sure they have a say in how it's going to shape up, but then to have it made for them.

IBM did EXACTLY the same thing when it sold its networking arm to Cisco - now the latter is their biggest partner for LAN products and for HDD manufacturing (DeskStar range), which they sold to Hitachi, I believe.

It's nothing new, strategically speaking and it's NOTHING to be concerned about, either. It is understandable though, that they want to cut their hardware manufacture losses and leave the miniaturisation of the Cell BE to the next two levels to someone who knows what they're doing (IBM) or have/want the manufacturing capacity (Toshiba).

It's quite conceivable that Sony will not only use 1 Cell BE in the PS4 but more likely 2. Or because multi-core computing seems to be quite popular now, it's likely that future Cell BE processors, that Sony will make use of, will have this design instead.

There's nothing to panic about here...move on.

It means Sony are recouping all their money back on what they've spent on Cell i.e. sold for (speculated) $860, then they sell the last elements of its participation in the processor to Toshiba and IBM.

In the future, the Playstation 4 will have a more accessible processor for developers to work with (remember the original Playstation, PSone, it was an easy console to develop for).

If Sony want backward compatibility for the PS4 to play PS3 games, then they pay Toshiba and IBM for the benefit, by such a time (when PS4 arrives) the Cell CPU will be smaller than 32nm, thus making it unexpensive to mass produce for the PS4.