While the 360 looks to be a quality machine, (I have one pre-ordered), it still doesn't have the cache or street cred of the Playstation brand. People at work who own PS2's are looking towards buying the PS3 as much because of their attatchment to the PS brand as the machine itself; just as they waited for the PS2 after the PS1. Those who have stated their intentions to buy a 360 are also looking to buy a PS3 at launch. PS1 owners were prepared to wait a year or so for the PS2, (after the DC launch), they'll wait again, (especially if Microsoft can't get sufficient machines ready for xmas). I can see the 360 increasing Microsoft's market share, but Sony will still be the market leader with the PS3.
In the past I've held out for the latest Nintendo machine, yet after the poor 3rd party support for the N64/GC, and having bought a rival machine this gen in the XBOX, I can see myself buying all 3, (next gen consoles). It seems anyone interested in gaming, is also looking to get a PS3.
As for the HD-DVD format having a significant advantage in Europe if the PS3 isn't to launch until 2007, I'm not sure it will hurt Blu-Ray that much. Japan and USA are markets where HD broadcasting and HDTV uptake are 5/6 years more advanced than Europe. How many households in Europe actually own HD screans capable of displaying 720p/1080i, (let alone the 1080p I persoanally hope HD fillms will be encoded with). Then who will be able to afford the intial £1,000 or so price of the first HD-DVD boxes of which Blu-Ray are sure to have it's equivelents available. Personally, I'm not prepared to spend more than £500 and would want a recorder also. I, therefore, probably like a number of others, will have to wait for the PS3 as a cheap way to experience HD movies etc, to then upgrade to a seperate hi-def disc recorder, (with HDD), when prices have fallen. Personally I'm rooting for Blu-Ray due to the 20GB advantage it has with it's dual layer discs over HD-DVD.