Well, it may be a little premature to call it a TOTAL disaster, but yeah, it is far from a runaway hit.
The system is just so overpriced and so full of stuff that most people don't really want/need at this point, that it doesn't matter if it "only" costs $600 and the tech inside of it is technically worth over $1,000 or some crap, people just don't want to pay $600 to start with.
I honestly wonder how things will pan out for Sony in the long run.
I mean, the system is pretty easy to come by, and they were SHORT on how many systems were initially coming out. So, that doesn't bode well for them.
And the thing is that most of the heavy hitting exclusive titles from PS2 were still made by 3rd party companies. Titles like the Final Fantasy games and Metal Gear, etc.
Now, with PS2 being number 1 by a HUGE margin, it wasn't a big deal for these games to be PS2 exclusive. There was more than enough of an audience there to make sure the games would profit without going multi-platform.
But, in this day and age, even an average game with an average amount of time, energy, and money needs to sell so many copies to gain a profit and be considered a hit. And with games like the Final Fantasies, Metal Gears, etc, usually being of higher quality and greater depth, thus requiring more time, money, energy, and resources to go into them, they need even more sales than the average game to be a success.
And with Sony's PS3 penetrating the market at a much slower rate than I'm sure they anticipated, this could result in not enough systems being out there (and therefore, enough people who would buy them... keeping in mind that even for the MOST popular title, not every owner of the system is going to go out and buy it) and therefore not enough potential sales for the game to make a profit while remaining exclusive.
Thus, the result will be the games either becoming exclusive to another system or just going multi-platform in general.
And if this happens with most of Sony's heavy hitting titles, then that leaves even less of a reason for people for people to even get PS3. Thus, allowing the sales to dwindle even further. It could be a vicious cycle of doom.
In that scenario, the only real way for Sony to pull itself out of this rut would be to create some really good, heavy-hitting first party exclusive titles. But, even IronAvatar, one of the strongest supporters of Sony amongst those who frequently post in this thread, has made comments on how their first part material isn't usually very good.
So, that doesn't leave Sony with much of a leg to stand on.
Now, it is possible that things could turn around for them. But I think it will require quite the miracle for that to happen.
At any rate, I felt and often stated long before the systems launched that the PS3 would most likely prove to be lackluster, and sure enough, that's pretty much what it has been.