Their are a number of reasons the ps3 isn't as dominate as the ps2 was.
1: Lots of negative press when it first came out. You all know the people that say "ps3 has no games" or the ps3 is "too expensive". This negative press was damaging early on though that stigma is faltering thankfully.
2: The wii effectively disrupted the marketplace and expanded the potential pools of buyers. Thus Nintendo took all the momentum and expanded on it.
3: The initial pricepoint was steep.
4: Lots of delays and lost exclusives.
5: A stronger xbox brand this gen.
6: Prohibitive cost of development. Its pretty simple, if your making an hd game since the 360 has a larger install base and the games going to cost a lot to develop you might aswell make it multi-platform.
7: Sony initial arrogance eg the ps3 would sell 6 mill without any games or whatever they said.
8: Difficulty in creating games for the ps3. Look at all the inferior ports that the ps3 got early in its life. This only contributed to the negative press and wold of mouth that surrounded the console.
9: Lack of any great number of games that appeal to the Japanese
Obviously lots of these points are debatable and/or you can come up with many more. Many of them are obvious but it wasn't one reason that made Sony lose the majority of its market share, but instead lots of them working together. Though the biggest obviously is the wii's disruption of the market.