Microsoft talks nice about Wii, but all of its actions say it doesn't take Wii that seriously. The Core could be cheaper than the Wii by now, but Microsoft would rather achieve profitability...that's a nice goal, but when did profitability ever stop them from losing billions in the Xbox vs. PS2 battle? MS also announced a couple of casual games and a buzzer-style controller. Too little, too late guys.
I think MS does take Wii seriously in a sense, but I don't think it will put out any serious competition for Wii until next generation.
All that said, I don't expect PS3 to surpass 360 in the next year or even two years. It may eventually, but MS will put up a much stronger fight on that front. It just hasn't had to try that hard so far because Sony screwed up so badly.
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