Actually, their plan was to dominate right from the start and they failed miserably. Luckily, they now realize that they need to make profit on the system, and have changed from the Win by Default stance to the let's take this slow and steady stance.
They should be able to win (all comparisons are HD) Europe with GT5, strong brand recognition, and other good games. But it won't be a massive win by any means.
America is already sold on the X360, and the PS3 doesn't have a chance to catch back up to it. Sony will do well, but the difference in America will be greater than the difference in Others/Japan and Microsoft will win out in the end.