If you don't take into account the victory over HD-DVD, it was released too early.
1) The CBE was not ready. It was designed to be tightly coupled via a very highspeed interconnect with another chip without the need for an external controller. For the cell blades or supercomputer nodes they are pretty much only found in either a symmetric setup with another cell chip or asymetrically, accelerators or a more traditional CPU (Opteron). Any one of these (except the Opteron) or a tighter coupling with a GPU would have been able to significantly differentiate itself technically from the 360. Furthermore, Rambus had teething problems with the XDR2 controllers making it impossible to release the PS3 with more than a 256MB bank. Given an extra year, they probably would have used a 512MB bank for each cell die (still would not be unified). With a dual cell (perhaps clocked a bit higher) setup with 1 GB of XDR2, realtime raytracing complex scenes becomes a realistic option. That would have made the PS3 seem a generation ahead of highend x86 gammer rigs.
2) Releasing at the same time as the wii knocked out any potential hype for the system. It's possible that Sony would have had more success presenting itself as the latest and greatest home entertainment gadget much more effectively if it didn't have to compete with the initial wave of Wii mania. And now it's associated in the minds of a larger portion of average consumers as having more or less equivalent specs because they were both released at the same time.
3) Microsoft would have been kept at bay by the Wii and rediculous realtime raytracing teasers. The pickup in 360 sales and developer support didn't seem to really come about until the PS3 disappointing release.
4) First to market is overrated. XBOX did poorly (but really not that poorly in the US at least) because they chose an architecture which was geared towards making PC ports easy rather than performance. It should not have been possible for the PS2 to keep up reasonably well with a system released 3-4 years later.
