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Shinichi Okamato, Senior Vice President and Chief Technical Officer of Sony Computer Entertainment, recently released a timetable for mass production of the Playstation 3 microprocessor in late 2005.
Assuming production remains on schedule, projected release dates for the Playstation 3 may be as early as Christmas 2005.

The PS3 microprocessor, nicknamed "Cell" (and also more recently nicknamed as "Grid"), will supposedly surpass speed of current console technology 200-fold, and is fabled to have some 1000 times the processing power of Sony's current console on the market, the Playstation 2, or some 125 times the processing power of Intel's new Itanium 2 processors.
Several companies are assisting Sony in Cell's design, including IBM and Toshiba, and an estimated $400 million will be collectively invested into its development.

To explain this intense research and development, Sony has stated that they intend for the Playstation 3 to reach far beyond use as merely a video gaming system: Mr. Okamoto announced in early March 2003 that the PS3 would be a "nexus of home entertainment."
Manufacture of Cell would not only blow away Sony's major gaming competitors, Microsoft and Nintendo, but could even place Sony as a direct competitor to Intel for cutting-edge processing technology.

More information may be obtained at:
BBC News
Playstation Reporter
Impact Sites 2000
GameBiz

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As some of what I read online seems a little far-fetched, I tried to remain as conservative as possible, and to cross-reference with as many authoritative sources as I could find.
It all sounds simply astounding -- a potential leap forward in computing technology, assuming it can work as well in reality as it does in theory...

This post has been edited by Phoenix on 6th November 2003 06:29

Every console generation makes considerable leaps forward in processing technology. Compare the 3.58MHz central processor of the SNES to the 93.75MHz+62.5MHz used in the N64.

And, as much as they always claim to be faster than PC technology, they take so long to get released that PC technology has caught right up either by launch day or soon after, for the most part.

We were promised that the PS2 itself would be something of a home entertainment centre rather than "just" a console, and that its "Emotion Engine" would revolutionise graphics and yet, wow, it hasn't.

True, Sony is planning to push the boat out further this time, but at the end of the day, a CPU that would be significantly superior to those powering PCs at the time would surely balloon the console's price out of the reach of the core group of "casual gamers" Sony largely aims for, wouldn't it? And even the less well-off "hardcore gamers" would likely find things problematic.

It'll be interesting to see how this turns out.

Tip to Sony: Wait another six months and avoid the embarrassing production underruns that smacked you across the chops with the PS2.

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