I think the real problem was the x50 line was that Sony simply stopped making them (certainly the 650 and 950) quite early on in the product's life. No-one knows why that happened, though many have guesses. I think there's little doubt that if Sony had kept the assembly lines running they'd have made a lot more off this line, and to many they're still very desirable, even at the higher price.
But when it came to launching a new product line Sony did the right thing to go for lower cost while retaining most of what made the x50s so good. The compromises are unfortunate, and I'm sure there are many who'd rather pay an extra $50+ for a 650, but in terms of gaining wider market penetration this was the right route to take.
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Originally Posted by ScalyFreak
Neither does Apple, and they're doing very well.
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[OffTopic] Actually, for the past 18 months Apple very definitely
has been competing on price. The iPad's $499 headline price was a huge shock and competing tablet makers are still unable to beat it (obviously I'm talking about tablets that actually work here rather than the ultracheap Chinese models that are barely functional). Likewise, the Macbook Air offers a mixture of form-factor and price that up until very recently was unmatched among Windows laptops. Apple isn't rushing to the bottom-end, and some of its models are still wildly over-priced, but its current success is based on using its supply-chain clout to offer mid-range entry-level devices that are extremely competitive.