Depends on the pricing scheme for BR players over the next year or two. Right now it's a huge advantage for Sony; the PS3 is one of the cheapest BR players on the market, and because its the only future-proof BR player, its the clear choice for most HD format adopters. But as prices of standalone players drop the PS3 will quickly lose its advantage, especially if MS and Nintendo are able to keep their respective consoles cheaper than the PS3.
Another major problem for Sony is that the average consumer doesn't give a rat's ass about BR. Many don't have HDTVs, many don't understand the advantages of HD formats, and because of the high price (not just of the players, but of the disks as well) it will be at least a couple of years before BR truly goes mainstream (I believe the estimate is around 2010). With the VHS to DVD jump we saw not only a huge jump in video and sound quality, but also in functionality. Scene selection, slow-mo, scene skipping, no rewind etc. But with DVD to BR/HD-DVD we only have an improvement in A/V quality, and if the sound quality of the average iPod (128kb/s bitrate and those crappy earbuds) is any indication, the public really doesn't care about A/V quality.
So you could definitely argue that BR is giving MS a significant advantage, it has forced Sony to release a more expensive product chock-full of features the average consumer can't take advantage of, which has slowed the PS3's sales. BR is very much a double-edged sword for Sony, it could make the PS3 a very successful product, or it could give MS the advantage.
PBSnipes
Let me put my 2 cents in since I actually sell HDTVs and Blu-ray players. The HD penetration rate in the U.S. is over 35% now this same time last year it was at 20% so more and more people are buying HD televisions. In my retail store that is the only kind we sell and the price of HD televisions have come down greatly so in few years the HD penetration rate will be well over 50% probably closer to 60%.
When people go buy hdtvs they talk to people like me and thats when people like me explain the advantages of hd televisions and what devices will further enhance their experience. 1/3 customers that I sell hdtvs to buy a blu-ray player. Actually more people rather buy a standalone blu-ray player than a PS3 just because the PS3 is seen as a toy to most older adults. Believe me I've tried explaining to them the PS3 is the better investment, but alot of them don't listen and buy a Sony or Samsung standalone player.
You must not have a Blu-Ray player if you think the jump between Blu-Ray and DVD isn't significant. My tv is worth over 1400 bucks and if you think people like me who have spent a considerable amount on our televisions don't want to see an improvement when we watch our movie collections then you need a reality check. DVDs aren't cutting it enymore. People with hdtvs want better sound and better picture quality which they get with blu-ray. If you hook up a DVD player to a hdtv you don't get any better a picture than you would get with a standard definition tv.
You are right to one extent by putting a Blu-Ray drive into the PS3 Sony did indeed slow PS3 sales due to the price, but you've must have missed the announcements that have been made in the last few months. People are choosing Blu-Ray and that is in large part due to the PS3. Now Sony will make way more money on Blu-Ray than they would have on the PS3 anyways. Plus while the PS3 has a Blu-Ray player within the console it will always have an edge and advantage over the other two consoles. I'm not saying that the 360 or WII are like the Dreamcast, but it has been documented that the Dreamcast was outsold by the PS2 in large part due to the DVD drive within the PS2.
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