Jack, I highly doubt companies come to 'win a generation vs a competitor' it's all fanboy folklore you know. Companies mostly run business to make a profit and for that, they aim at taking greater market share.
MS would NEVER leave the gaming business if they become really successful, which now looks possible to achieve. They'd just try to get more profits and more market share...
On the other hand, my answer to your statement meant that considering recent hardware sales, their "second place" didn't look sure at all anymore to me...
This week only, the PS3/360 gap decreased by 200k consoles to roughly 5 million. At this rate, PS3 would reach 360 installed base in only 6 months (25 weeks)... I know the rate will decrease, but still you see the point, it's not sure at all they'll "win" against Sony now... Actually, it looks less and less likely as PS3 becomes more successful.