No, I think Canon took their eye off the ball in respect of their sensor technology. In respect of everything else, especially lenses, they are more than competitive.
For their DSLRs, Canon's strategy seems to centre on retention of in-house sensor Fab while Nikon has gone fab-less and use Sony's offerings which appear to be materially ahead of Canon's. Nikon then follow up with a very effective jab to the kidneys being highly aggressive pricing.
Canon must respond and quickly because the Nikon offering is sufficiently compelling for a lot of people to swap systems, and that is quite a rare market advantage existing right now.
Either way it is a very fascinating case-study of both technology company strategy and human/consumer phsycology (have a quick look at the dp forums if you can stomach it - fascinating reactions).
I get the impression that Canon's R&D department is involved in all sorts of fascinating sensor development. I mentioned that I vaguely recalled many years ago reading a news item that Canon had succeeded in producing a 30mp sensor. Wayne Fox found a more recent news item reporting on a 200mp sensor developed by Canon, and just today whilst browsing the internet I came across the following report of an 8"x8" CMOS sensor that Canon has produced.http://www.canon.com.au/About-Canon/News-Events/News-Press-Releases/Canon-develops-worlds-largest-CMOS
There are also details on the 'canonrumors' site of the very recent issuing of a patent to Canon for a back-illuminated sensor for APS-C and Full-Frame formats. (January this year)http://www.canonrumors.com/forum/index.php?topic=2961.0
We should try to get things into perspective. Just a few years ago Nikon broke into the full-frame DSLR market with a relatively low resolution model (the D3) which had better high-ISO performance than any Canon model.
Well, it would have to have at least something better than the well-established competition, or there would be no point. How could you break into the market! But to get things into perspective, the D3 did not have lower noise or better DR at base ISO, only at higher-than-base ISOs. Canon still had the advantage of higher resolution with its 1Ds3 and 5D2.
Nikon later came out with the D3s which had even better high-ISO performance, but again not better performance at base ISO which was still about the same as the higher-resolving 5D2 and 1Ds3 models.
With the release of the D800, Nikon is now ahead in two major attributes; DR at low ISOs, and resolution, but the 5D3 is at least as good at ISO 1600 and above. In fact, at ISO 25,600 the 5D3 is very marginally ahead, according to DXOMark.
Now I have no doubt which camera I prefer. I happen to value both resolution and clean shadows. I already own a couple of good Nikon zoom lenses and my Epson printer is the 24" wide 7600.
However, I can understand that there are photographers for whom 22mp, a relatively fast frame rate, good high-ISO performance, a quiet shutter and accurate autofocussing, are sufficient.
Whilst its true that the D800 in DX mode using battery grip can also achieve the 6 fps of the 5D3, the 15mp DX image then loses all advantages but one, and that one advantage is better DR at low ISOs. In all other respects, the 5D3 image should be at least as good or better than the D800 in DX mode. SNR in the midtones is over one stop better across all ISOs. Resolution is also better of course, and DR at and above ISO 800 is also better by a degree which rises to a significant 1.5 EV at ISO 12,800.
If one needs to shoot fast action at high ISO, the 5D3 is superior to the D800. As always, the best tool for the job should apply.