I assume you prefer Guitar Hero IV to Rock Band. I don't know after watching E3 and seeing what Guitar Hero has line up compare that to Rock Band 2 it was clear which one got better reception.
May be they can't compete is a bit strong but consider in the past they were so gung-ho about making sure their instruments do not work with Rock Band (or vice versa) I find the about face very interesting. As for what you are saying about Activision, last year they didn't seems to care about extra sales or saving consumer money. They actually stop PS3 guitar from working with Rock Band PS3 version. Also having their DLC (what little they have release so far), not compatible with their new games doesn't seem to be very consumer friendly.
I used to be very pro-Guitar Hero but after I got Rock Band, I never touch Guitar Hero 3 again.