Yes and no ...

The Xbox 360 (essentially) had a one year head start over the PS3 and Wii, and they screwed it up because of (massive) early supply problems, and the Red Ring of Death. When Microsoft (easily) had the best line-up of 2006 most of the press they received was about their poor quality hardware, and when they had the opportunity to reduce the price of the XBox 360 by $100 they couldn't because they had to pay for a massive warrantee extension.

Personally, I would have gotten an Xbox 360 sooner. But that is just me.

360 sales would have seen marginal improvement across the board without the manufaturing problems. But in general 360 sales are doing very well.

Price of course is the greatest factor and in Europe and Japan, a negative bias towards MS before the RROD even existed is an even greater factor. All in all I am sure MS would have been much happier if it never had occured.

i dont think they would have been far better,but they would be better

I don't know...I know some people who like me buy a lot of times second handed consoles but because the RROD problem  they don't (would suck that you have it a week and get the RROD with no Garantie).

^but they give you a three year warranty

Basicly there is one cheap casual console, maybe two if you don't already have a PS2, so that leaves you with an easy choice; Wii.

One the other hand with the 360 its not a choice between 360 and nothing. You go to the store with 400 dollars and you can pick A) the 360 elite for 450 or B) the PS3 for 400. Its kind of like buying a TV or car or any other big ticket item, people think about the features, the reliability and all that.

Windows is also very unreliable, Vista especially, and yet, because in many cases there is a lack of choice, people end up with it anyway. Alternately in the case of the 360 stuff that slides in the Windows world because people have no choice causes epic fail in the consumer market. If Windows crashes all the time or bricks a computer you buy a new computer and a new copy of Windows, what else are you going to do? If a 360 bricks and/or you know someone who it has happened to or read about it then you're far less forgiving because theres a very easy choice (the non Microsoft product). Of course there are dozens of other problems with the 360 such as the loudest operating volume known to man, the lack of blu-ray, that almost all good 360 games come out for PC or PS3, that it doesn't have any of the standard features the PS3 and even Wii come with (internet browser, Wireless internet, free online gameplay ect).

Basically the 360 is high in price and low on features with bad reliability along with a very limited library of truly exclusive games (games that are ONLY on the 360). In the face of all the many reasons not to get a 360, I bet the RROD ranks behind several other considerations but is probably in the top 5 concerns. Why do you think the 360 was released first? They knew the only way they'd get a real start this time is with a temporary monopoly while Nintendo and Sony were still developing, I guarantee you if the 360 came out in Nov 2006 with the other two consoles it would have sold even less then the original Xbox (I doubt the 360 will sell many more by the end, maybe 30 million instead of 25)

Though for those of you who say things like "this hurt my image of Microsoft" or acted like the failure of 360 hardware was any kind of surprise...have none of you ever USED a Windows PC lately?  I have had more memory leaks and crashes on Vista (which I only use part time for games) then I could ever have immagined.  There is no "gold standard" of Microsoft reliability to tarnish, everyone knows their stuff is crap 99% of the time, at least in consoles, MP3 players, smart phones and the like you have a choice.  Immagine the horror of running Windows Vista on a Microsoft built PC, 33% failure for the PC, 40% failure for the OS, if you made it through booting up without exploding it would be some kind of biblical miracle.

@Impulsivity: Sorry but VIsta is nowhere near as unstable as you make it seem. I've been using it for more than a year on two computers and I haven't seen it crash ONCE. Furthermore, the big multinational company I work at has just deemed it stable enough for being deployed throughout the whole corporation.

If you're having such big problems, it must be due to faulty hardware or drivers.

I dont think it would have made a huge difference.
The sony brand name is A big factor in people choosing that product.
If the ps3 had been out when I got the 360 I would have gotten the ps3.
ms needed the one and a half year headstart to have had any hope.
mind you it seems to have worked for them.