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The PS3 is not too far behind, but too far ahead. What really screwed Sony over was Blu-Ray. If they could have waited a year or two more, price would have dropped and developers would have been better prepared. If they had waitied, however, HD-DVD might have already won the format war.

It really can be blamed on Microsoft. I still think they played this perfectly. They forced the PS3 to release before its time, with high price point and no exceptional games, aside from Motorstorm and Resistance.

As well as Nintendo is doing right now, the PS3 launched with MGS4, GT5, Playstation Home and at a price between 299-399 would have been too much to deal with. It had the momentum, and the Wii would have never gotten the attention necessary to see how fun it is. Instead the PS3 was full of issues selling for $599 with familiar AAA game and no new game that really amazed people.

People still love incredible graphics, and I bet the best selling movies will still be the ones with the best effects. Sony just has had too much negative PR and they will need games that assert all their claims before they can get back to the old Sony. Uncharted and Ratchet are a start. Hopefully Haze, MGS4 can live up to the hype and Sony will be more judged because of their product and not really a chance because of past PR screw ups.

I for one love my PS3. I think any one who enjoys gaming/gadgets would love one too and the PS3 is still the best pair for any HDTV, worth 3x its selling price.
However, if any more major games dont live up tothe hype America will be lost for good this generation.