It definetly will, but it will take a while.
The 360 will never be a success in japan and the PS3 will which will give it a massive advantage. If you look back at last generation, the PS2 sold more in japan alone than the xbox did worldwide. I doubt the exact same will happen this gen, but it will have a massive effect on global sales figures.
The 360s worst enemy is its own userbase. the majority of them shun anything that doesnt involve killing/shooting or driving and while this is all well and good for the time being, theres only so many consumers that want to play those games.
The PS3, even at its high price will eventually offer a far wider range of titles than M$, as mentioned already, Buzz, Singstar, Guitar Hero and so on are already well extablished on the brand and while M$ may have some of those, or atleast something comparable, the average 360 owner doesnt even want to know.
M$ are stuck with the machine as it is now, filling a part of the market very very well, but unluckily for them that part of the market is a small % of the whole market, untill they can break the mold and sell other game styles to new customer, they are ultimatly faced with hitting a cieling where they satisfy their current target market.
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