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The thing is whatever MS does, it won't turn the tide now that the PS3 is finally affordable.

PS3 was outselling 360 constantly before MS price cut, there's no reason to think now it will be different, especially since there are tons of great PS3 exclusives now.

You can already buy a 360 for less than 200$ so further price cuts wouldn't help at all : everybody who wanted a 360 already has one now... That's why MS has no plan to cut the 360 price to 100$, it would just be a useless waste of money.

It's not like MS could compete with Sony in terms of exclusive quality and quantity. THAT is the main problem for them, content.

The only way they could is by buying multiple studios and make more exclusives, which they chose not to do long ago. With their business bleeding on every front (Vista, Office, Zune, browsers...) and Sony looking strong again, they won't start buying studios now, it would cost them too much.

MS plan was always to kill the PS3 as quickly as possible to benefit from Sony hesitations with the PS3, now that it clearly failed it's over.

On the long run the war is lost for them. Few studios = few great exclusives = no long run win.