Pretty sure the actual reason was console margins and non-gaming buyers. At the time [1], it was believed that Sony lost hundreds of dollars per console. The business case for the losses was that the cost could be recouped with games. But people and organizations buying the PS3 for its computing capabilities, running OtherOS, were not buying enough games to recoup the losses.

[1] https://arstechnica.com/gaming/2006/11/8239/