They had the dominant Ps2 so they weren't really prepared with a plan for Ps3 and that is why they have a lot of the problems they do now.
They certainly had a plan, it was just a really bad one.
The PS3's problem has never been that it's $600. The problem has always been that it looks just like a 360 AND costs $600.
I put the blame squarely on the $600. No system has ever found success at this price point, however powerful. I wouldn't buy one right now if it looked 5 times as good.
Xbox proved the most powerful system always wins, as it beat the much better supported Gamecube, and even took a few from PS2 despite that it started at zero, and could have sold much more if MS hadn't ended it early after 4 years.
Historically, the most powerful system has
never won, or never that I'm aware of. Hmm, maybe the SNES, but that was really kind of a tie.
Would a year's delay on the PS3 have helped? Hindsight is 20/20, and it's true that it's hard to imagine them being much worse off than they are now. The usual argument against it is that the 360 would have gained an insurmountable lead, but as it turns out it really hasn't gained much ground this year. Delaying the PS3 might have even made more people hesitate to buy a 360, because at least then they'd still have the whole mystery/hype factor surrounding the PS3 instead of showing their cards and revealing an unimpressive hand. They probably could have stayed fully behind the PS2 for 2007, because it's obviously still got some life left in it.
But of course, it's not so simple. As somebody mentioned, they had to get the machine out in time to save BluRay. 3rd party developers also probably wouldn't have been happy with the delay, and might have just gone with the 360 so they could pay the bills. And launching with 5 AAA titles wouldn't be as good an idea as it sounds - the userbase wouldn't exist to properly support even one of them, and they would be competing directly with each other.
I guess it doesn't matter much now, anyway.