It's not bad if it's domination a la Wii. But it is rather bad if it's domination a la PS2. What would have happened if PS3 had dominated like PS2? MS would probably be gone from consoles, and probably so would Nintendo. Or if Sony and Nintendo had simply swapped placed, with MS staying about the same then the result would have been similar, with only Nintendo the last man standing.
Though what that might have done is hasten the advent of the post-console era, with a lot of Onlive type operators getting started and some of them remaining viable as more gamers migrated towards that form game delivery than what happened in the 7th gen with 3 fairly successful consoles.
Sometimes with evolution you need a bit of a crisis to move things forward. With one dominant player the environment is unstable and there is a lot of scope for people to come in with radical new ideas, which to some extent Nintendo did with Wii for a temporary benefit. With 3 co-dominant, more or less, players the environment is much more steady and it's harder for radical new ideas to attract a big enough segment of the market.
“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.” - Bertrand Russell
"When the power of love overcomes the love of power, the world will know peace."
Jimi Hendrix
