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The way I see it is PS2 (2001 most places) vs Dreamcast (1999) + Xbox (2002). Sure you can launch earlier but if you do not have proven support and good games then it won't work. Sure you can launch after and have stronger hardware but people are already supporting the popular console at the time. The only difference is MS would own both consoles and make it completely BC. So instead of the 160m PS2 vs 8m DC+ 24m XBOX, it would be like 120m PS vs 25m XBOX+ 25m XBOX.

It goes without saying that a new PS console will probably be popular unless Sony messes up worse then the PS3.