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I dont think MS have to worry at all.
Current sales arent a problem.
PS3 is doing what it's doing for 2 reasons.
1. Pre christmas price drop.
2. HD DVD failiure.

The comment that the Library advantage is getting closer isnt really right.
There are very few exclusives for PS3 even in 08 compared to 360.

MS will be nering a price drop currently here in UK Premium pack is £249.
Get that to £199 and core Arcade to £159 and Sony will have serious sales problems again. Also if a Blu Ray add on comes out this year (E3 announcement?)
That would be it.