This is not a rant nor a complaint, but a simple bloggish commentary. (Since I don't really have set up any actual "blog" per se, I really don't have a good place to put this kind of text, so I'll just put it here.)
When Sony entered the game console market (this was a time where the competition was really tough, mostly dominated by Nintendo and Sega), they made one absolutely superb decision with their console (in other words, the PlayStation) which was one of the smartest moves in game console history, and probably had a very significant impact on subsequent sales, soon making Sony the top console producer of the market:
They decided that the storage format for PlayStation games would be a regular data CD (and hence the CD drive would, rather obviously, be also fully compatible with music CDs).
The major competitors at the time (and for a surprisingly long time afterwards) were using proprietary cartdridges as the storage format for games. This allowed these companies to keep a tight grip on all games produced on their systems, and made producing such cartridges difficult and expensive, and required for game developers to have specialized equipment during the development of the games.
(Of course the positive side of game cartridges is that they are extremely hard and relatively expensive to copy, which cut down piracy quite considerably. Copying CDs is much easier and imposing anti-piracy measurements much harder, so piracy would be much more rampant, but Sony took the risk.)
Choosing data CDs as the storage format was a really smart move. CDs were much easier and cheaper to produce, had a huge storage capacity compared to the game cartridges of the time (which typically could hold 64 or 128 megabytes of data, while a data CD can hold over 600 megabytes), and allowed games to use CD-quality music tracks. It also made it more feasible to distribute a game on multiple CDs, at almost no extra cost (because pressing CDs was really cheap even back then, and was getting cheaper by the month). Of course the PlayStation doubling for a CD player was a plus to the customers.
The PlayStation soon became the best sold console, clearly beating their competitors, and the CD drive might have been an important part of this.
When designing their next-generation console, the PlayStation 2, Sony learned from this good choice and repeated it: Now they chose the DVD as the storage format for PlayStation 2.
Again, this was one of the smartest moves in gaming history. Not only did it have the same advantages as the CD (but with a significantly larger storage capacity), but the console thus also doubled as a DVD player. Many people were actually buying the console primarily as a cheaper alternative to a DVD player, rather than a game console (DVD players were really expensive at the time, and the PlayStation 2 was actually cheaper than most of them). This was probably one of the major reasons why the console became by far the best-selling console of all time.
(In contrast, Sony's competitors did not learn anything from the PlayStation when they made their next-generation consoles. The Nintendo GameCube used a proprietary optical disc which was physically smaller than a DVD and thus the console could not double as a DVD player. The Sega Dreamcast used a proprietary CD format, hence having the same problem. Both consoles sold relatively poorly compared to the PlayStation 2.)
Another important point in both the PlayStation and its successor was that they were clearly technically superior to their competitors. Sony made, once again, the right decision in investing on the technological prowess of the console (while keeping it cheap). For a time the PlayStation 2 was by far the most technologically advanced console in existence, and that was probably also one of its best selling points. (The Xbox would be the first console to seriously compete with it in terms of technological prowess, almost two years later.)
Sony's decisions about the PlayStation 3 were more mixed. The choice of storage media, in other words using BluRay, was once again just right. (Although Sony got lucky with this too, as it was impossible to anticipate if HD-DVD or BluRay would win; BluRay won, and hence the PlayStation 3 won.) Like the PlayStation 2, many people are buying the successor as a cheap BluRay player, besides being a game console.
Where Sony went slightly south with a more dubious choice was trying to go once again for the technological prowess, ahead of any competitors. They made the rather odd choice of using a very unconventional CPU design which, while extremely efficient when properly used, is so different from regular Intel or PowerPC CPU designs that writing programs which fully utilize the full potential of the CPU is laborious and requires significant amount of extra work (especially for games which are not written exclusively for the PlayStation 3, even though exclusive game developers suffer from this too). The PlayStation 3 suffered from this problem especially in its initial years, with the first games not fully utilizing the entire CPU and thus being significantly slower than the same game on the Xbox360. (Also, it didn't help that the PlayStation 3 was published significantly later than the Xbox360, so it was for a really long time an underdog in all possible counts.)
However, the platform where Sony really made a rather big blunder was the PlayStation Portable. Apparently blinded by the idea that "optical disc storage = huge success" from the PlayStation and PlayStation 2, they made the extremely dubious choice of using an optical disc as the storage medium for the PlayStation Portable. And a completely proprietary non-standard one at that. Seemingly they did not learn anything from the Nintendo GameCube nor the Sega DreamCast.
The storage medium choice of the PlayStation and PlayStation 2 was a big success precisely because they were non-proprietary standard formats. This had a huge advantage over the competitors (even if it makes piracy easier), as already mentioned.
Using a completely proprietary non-standard optical medium on a handheld device is just silly. It seems that Sony got completely confused about the real reason why the storage medium of their previous consoles were such a huge success, and mistakenly thought it was because it was an optical medium (although that had nothing to do with it).
There are no standard (read-only) storage media which are usable in a handheld console, so using a proprietary format is more or less a given. However, if you are going to use a proprietary format anyways, do it right. An optical disc (compared to a read-only memory card based solution) is just silly for many reasons, such as:
Sony probably realized this poor choice (unfortunately too late) and tried to correct it with another poor choice: Seemingly dazzled by the success of the iPhone as a handheld gaming platform, they decided to use the same idea with the PSP Go. In other words, the storage media would be a flash drive, no disc drive, and all the games would be downloadable from the internet.
There are many mistakes in this choice as well. For instance:
The PSP Go was just a really, really bad idea, plain and simple. What were they thinking? It might have worked if it had been their very first handheld console, but as it currently is, it just cannot compete with the original PSP, no matter what.
(Many people are also quite wary about the PSP Go having a physically smaller screen than the PSP. The huge screen size, which was very novel and unseen at the time for a handheld, was one of the major selling points of the original PSP. While this is certainly not a killer, and many people actually like the smaller screen more, it's still a bit of an odd choice.)
There are currently (as of writing this article) rumors that the next version of the PSP will, once again, include the disc drive and thus full backwards support for existing PSP games will be restored. If these rumors are true, it seems that Sony has realized their huge blunder. They are stuck with the disc drive and there's no way out of it now.
Needless to say, if Sony had made the right decision in this to begin with (ie. use a memory card based solution), they wouldn't be struggling now with this dilemma, and new versions of the PSP would truly be significantly better than the original (while easily maintaining full backwards compatibility).