Hilarious thread. Sony would have definitely made it out better, though I don't agree with the 360 part. The remaining HD console would still be in a healthy position today.
There's no doubt that the PS3 has influenced the 360 in terms of game development, however most of its hit games today would have still seen releases. If there was no PS3, this would simply mean that they'd be PC / X360 titles. Games like Bioshock, Fallout, and Oblivion would never arrive on a Sony console. Multiplats like Madden, Fifa and PES would quickly see its highest sales on the 360, due to XBL and HD graphics.
Oh, of course. There's also Modern Warfare 1 & 2. These games would have murdered the PS2.
Although some games' existence come into question in this scenario (Assassin's Creed, GTAIV, RE5, FFXIII, etc), no matter how I see it, Sony would have needed a new console by 2009 at the latest. I guess it would have released in time for Modern Warfare 2, and alongside the Move (as they would have the freedom to react quicker to the Wii). Since the console would actually release with good games, motion controls (I know.), competitive online, and at a reasonable price, it would have launched to respectable sales.
