My view on why Sony is currently in 3rd Place.

[Gnac]

Reasons why PS3 is having a hard time - in summary:

1. Initial price point - A barrier to everyone besides early adopters, Sony faithfuls and / or those eager to play the next installment of their favourite game series. For those interested in an affordable Blu-ray player, there are now standalone units for half the price of a PS3 (see: Samsung) which integrate better into a home entertainment setup (WHOO! YEAH! lozenge form factor which doesn't take kindly to having things stacked on top of it).
2. Too many model variations - SCE (apparently) understimates the value of backwards compatibility; yet overestimates the public's ability to discern which model is best for them - which is especially difficult when the specifications are so unstable. In certain regions (Europe, for example) you don't even get the choice.
3. Over-reliance on past success (reputation / brandname) to push their new product, as well as an apparently weak grasp of WHAT IS GOING ON by the executives in SCE and Sony itself - their Public Relations statements and advertising campaigns are often confusing, patronising and disgusting. Perhaps they DO know what is happening, but are attempting to instigate Damage Control to keep shareholders happy.
4. Over-reliance on third-parties - MGS4 and FFVIII have enjoyed over two years of constant hype. Perhaps the former was worth it, but Square-Enix's recent move has left SCE with egg on their faces. If they nurture their acquisitions over the next few years, they may be able to pull a Nintendo-esque survival plan by relying on their own IPs to see them through to the next gen, a la Nintendo64 / Gamecube.
5. A combination of hype and and, by comparison, an underwhelming end-product in the case of Heavenly Sword, Lair and Haze.

_{Edit: Ahahahaha I HATE RICH TEXT EDITORS.}