Assuming it does, the same thing that happens to every market leader as a new entrant gains ground, they compete over market share.
There's alot more that the XBox would have to do to actually compete in Nintendo's market. This is a step in the right direction, but it's no where near enough. It'll have to become a "white good", alter it's market perception, among other things.
A game I'm developing with some friends:
www.xnagg.com/zombieasteroids/publish.htm
It is largely a technical exercise but feedback is appreciated.







