I honestly believe that Sony shot themselves in the foot majorly (in a way never before seen in the video game industry) by releasing the PS3 one full year after the XBOX 360. Microsoft is a very smart, energetic, competitive company with almost unlimited resources, and their main goal is to establish a major foothold into the multi-billion dollar video game industry. Sony seems to have underestimated Microsoft, and their motivation to be a major player. While Sony was delaying the PS3 for a FULL YEAR after the 360 launch, SOLELY due to the blu-ray diode shortage, Microsoft was putting out AAA games and shelling out the big bucks for wickedly awesome exclusives. Not to mention the ludicrous $600 pricetag on the PS3 at launch.
That said, should Sony have released a cheaper ($399) PS3 at the same time as the 360, but with a later blu-ray add-on? I really think that if they had, there would be no question of which console (not including the Wii) would be winning in sales and AAA exclusives. The playstation brand was a household name, and allowing the competition a year head start was brutal and a major reason for their legendary fall from grace/market share.
Even if the PS3 overtakes the 360 in sales, it will not be by much, and it will probably happen within a year or two of the next generation of consoles. Either way, Sony's former massive lead in market share will be reduced exponentially. In fact, Microsoft is doing a good job in making XBOX a household name- I see the 360 all the time on tv sitcoms, Southpark, movies, etc, and I pretty much never see the PS3 on tv.
And I say this as a guy who wants a PS3 to play MGS4, but I am not confident in the direction Sony decided to go. Maybe when I actually need a blu-ray player (which I do not right now), and it costs $200, I may bite.
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