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Dominate is such a strong word... No, I don't think it will. PS3 will definitely outsell X360 but not dominate. In order to dominate the PS3 needs a maximum price of $299, preferably less, and excellent exclusives. Needless to say, the price is still too high and the first big exclusive is coming next month... without a price cut.

Next year? Who knows; maybe. 2010? Probably too early to say but if MS doesn't come up with something miraculous then yes.  Compared to Wii it's hard to say. PS3 has a chance to compete with Wii in late 2009 or 2010 if everything goes fine.