Comparatively the PS3 is being outsold by the 360, and especially the Wii, in America and Worldwide. Yes, this is true. Does that mean it is a sinking ship? Hardly. The PS3 is still selling upwards of a couple hundred thousand units per month. It still has a strong attach rate and a number of good exclusive titles. It still has an install base of several million worldwide, and climbing. Its not exactly a "sinking ship."
However, Sony has made some crucial mistakes (like the price) and does have some problems to face on the horizon. They're not outselling their competitors which is something Sony would obviously like to change, but there is still time to correct aforementioned errors and catch up. I don't think Sony is in a position to think about catching up to Microsoft, let alone Nintendo, in the near future, and I don't think that ought to be their aim. The glory days of the PS2 are long gone and Sony needs to focus on getting their online infrastructure sorted out and actually start making good on the grand promises they made at launch. They need to solidify multi-plaftorm game release dates that rival the 360's, and they need to work closely with 3rd-party developers to lock down some exclusives. So far they've been trailing behind in everything, and they need to get caught up quickly in order to start leading their competitors in some areas. Until they do that, they are going to continue to fall behind.
That being said, its really odd and kind of sad to see the PS3 coming up in third place. I thought they had the best E3 and had a strong year all around with MGS4, LBP, Resistance 2, and so on. I very rarely say this but, it really seems like they're trying hard to give people what they want and expect, I wish their efforts were being rewarded a little more. Don't let Microsoft push you around Sony, you're a big boy too. :lol