PS3's launch was not all that bad, but the software sales in U.S and Japan have been troubling.
PS3's s/w sales have been steady in U.K despite the 80% drop (which is obvious after a launch, sony has the tendency to stock up and flood the market during launches), Resistance and Motostorm are still finding place in the top 3. Which goes to show first week sales of PS3 software would have been amazing.
Sony basically wiped the floor with MS and Nintendo with its spectacular launch s/w sales across europe. Nintendo 3rd party sales should improve once publishers assign better development teams. Red Steel and Rayman did well because they were supported by great developers and not fourth string developers who pushed tripe like Farcry for Wii.
Unless Sony stops hemmoraging exclusives like Devil May Cry 4, Assasins Creed, Mercinaries 2, Virtua Fighter 5, Virtua Tennis 3, etc.. they are going to find the going tough in the U.S.
Sales of exclusives Lair, Heavenly Sword will be critical for Sony.