A year on from launch, and the PS3 is still not selling. Here's why (my opinion):
1) The PS3 is still too highly priced for what it is. While the technology might be great, the average consumer (i.e. person who is not on the internet reading about videogames or writing about them like me) does not care about its Cell processor, 204 GFLOPS single precision float and 15 GFLOPS double precision, 256 MB of Rambus XDR DRAM, or RSX "Reality Synthesizer" when, essentially, the Xbox 360 graphics look the same and the console is much cheaper. This problem is further compounded by the rampant success of Nintendo's Wii, which is proving that you don't need insane levels of technology or graphical beauty to be a success.
2) The BluRay drive. Sony has made the very dangerous move of committing to as yet unproven successful. While they try to push it as a selling point, the fact is that it is null and void because the mass market isn't ready to decide whether it likes HD or BluRay more yet, meaning that consumers are hesitant about investing in a technology that may be obsolete within a few years. Like the VHSvs Betamax conflict, or all those people that invested in MiniDiscs (remember them?) consumers are wary of buying loads of BluRay DVDs only for the amount of new films being produced and put onto the format to dry up. Should HD win out, Sony has a massive problem on its hands, as it has a console with a built in DVD player, the technology of which is obsolete.
3) The ridiculous lack of marketing for the console or its games. I haven't seen advertisements in media stores, magazines or print for anything. When the 360 came out it was everywhere. When Halo 3 was released the hype was insane. People need to be reminded that your product is out there and that games are being released for it. The user base is so small that word of mouth alone won't do it. IT doesn't matter how many good games you have, they won't sell themselves.
4) Lack of good, exclusive games. Name me one big, exclusive game on the PS3. One. Bet you can't. This is the system's major problem, every game they have has been delayed or lost its exclusivity. Hell they didn't even launch with a killer app. "Resistance: Fall of Man"? Really? The good game was met with no marketing, and followed up with... Nothing. GTAIV, Devil May Cry 4, Killzone, Assassin's Creed. Every major game the console has had. Of the above three only one has been released, and that was a full year after the consoles US launch. GTA was delayed because the PS3 port was nowhere near finished. The only shining light the console has is MGS 4, and even that is in danger in terms of exclusivity, as Konami have said they're considering porting it to the 360, and Kojima doesn't mind.
The four add up to a monumental problem that I don't think the system will be able to overcome. The 360 has killed it in Europe and the US, and the Wii is dominating both. The Wii which has no built in DVD player, limited online functionality, no true HD and far underpowered hardware. And it's kicking the crap out of everything. It - in my opinion - suffered from a lack of decent games after the initial launch batch (aside from gimmicks that have zero replayability), which is why I sold mine, but it is still dominating everything. Who's have thought that Xmas 06 would have been the best chance you would have had to get a console for Xmas 07? A year of selling out everywhere, compared to not even selling out on launch day. To me, the PS3 looks like it is destined to be the Gamecube of this generation. And while the Gamecube had a definite marketing strategy and approach that failed, the PS3 was something that was expected to sell because of its past reputation. It didn't. And it's nobodies fault except Sony's.