Interesting podcast, although I think they overlooked one of their best arguments, that both the N64 and PS3 were the ultimate escalations of Nintendo and Sony's hardware design philosophies.
Beyond just cartridges and Blu ray both those companies dug much deeper into their existing business models and strategies, what happened with the N64 is the market changed because of the CD, and that completely shifted the paradigm of what consumers expected and therefore required a change from Nintendo aswell. But even with the NES there was a set limit of excelent titles that would come out every year and be sold at a steep price with no complaints, wereas with the N64 we had a whole new paradigm for game consoles which was set by the CD. Had the market stayed the same the N64 would have maintained its dominance, as it was the perfect continuation of the standard business model.
What we are not seeing today is an obvious market shift that goes against what Sony is doing, and not just technology-wise but trend-wise. That's the main difference between the N64 and PS3, if the market doesn't change then Sony will continue to dominate, regardless of any of the PS3 "flaws". Like the N64 it is the perfect continuation of what was already going on in this industry.
Maybe with the PS4 Sony will take it up another notch (like they've been progressively doing) by making it so much like a computer that it will be the ultimate shot to their own foot, but right now they aren't really doing that. Or maybe they are betting too much on a change that won't happen, and that's the only thing I can think of which is HD. Which is completely unpredictable at this point.