How are MS gonna "force" Sony out of the market?
If/when the PS3 fails it will be entirely due to Sonys handling of the system. The made it too expensive, they made it too difficult to develop for and they made big errors in trying to force Blu-Ray on to consumers. MS has done nothing this round taht they didn't do last, other than being the first to market (which does make quite a big difference). Still, the 360 is not selling any where near as well as it should be if it is to "force" Sony out of the market.
Also, have you seen the losses that Sonys Playstation division is making recently? They are huge. Sony is more than capable of throwing billion after billion at the PS3 and PSP.
How much money you can throw at a failing division is dictated by Shareholders at the end of the day. If MS shareholders don't see a return on the investment soon enough then the division will get closed down.
How? By releasing a dev kit that makes it easy to port games between the 360 and PC for one. By bribing games companies for AAA franchises that have previously been bribed by Sony too

Sony might be able to afford to make huge losses - but do they have the will to do so? Remember, for Microsoft, the Xbox project is about who controls the entertainment industry of the future, for Sony, the Playstation is just another consumer electronics brand.