Sony made some smart post launch decisions to steer the PS3 Titanic away from the iceberg. They promoted Kutaragi into retirement, changed all the marketing for the PS3, and began to try and fit it back into it's place as a gaming system. The result of this is that the PS3 worked its way back into being a real contender. Now, as far as market share goes, the PS3 is a horrible failure. They sacrificed a huge amount of the market in this blunder. That is not all their fault however, they slipped when the other guys didn't. By the time the PS4 releases, the PS3 will have laid much of its criticism to rest. I think Sony has a better idea of the Playstation's identity now and won't make the same mistake again. It cost them dearly this generation. Nintendo really hamstrung Sony with the Wii in Japan (I think this was the most damaging to Sony in overall image). Even if we take the Wii out of the comparison, due to arguments about different markets, if the PS3 pulls more overall market share than the 360 this generation, it is still a disappointment. Their market share dropped like a rock, while Microsoft's rose a great amount.
All in all, the PS3 has improved greatly since launch. The online system has improved greatly and I think Sony was smart to pull Home back to completely rework it into something that fits the PS3's role as a game system. I'm not sure LBP is going to move that many PS3s. Sony seems like they are going after the people in the market that are still buying Wii's. Given the big price difference and the lack of PS3 games outside of LBP to support that image, I think they are going the wrong direction. I think they will do better promoting their action games like MGS4. I also think they might be creating some problems with all the different versions of the PS3 they have created. If they really want to convert their PS2 crowd to the PS3, keeping backwards compatibility, at least for one model, would seem wise.
To keep their momentum going, though, they really need to whip those first party developers. GT5 is a big one for them. Screw LBP, get GT5 up there with a special GT5 Edition PS3 and that will move some serious units. The development time for GT5 is shameful. That is how I bought a PS2 with GT3. Get a Team ICO game out there. Games like ICO and Shadow of the Colossus are not blockbusters but they flesh out the catalog and give some more exclusive support.
I give this thread a 9.4.