They will not lose all of their gains against Sony. The first year of a console has limited supply over demand. (Even the Wii U was selling out at first last year) so cutting price would not change the result significantly.
True gamers spread the word, but X1 gamers will probably be just as satisfied as PS4 gamers and because of the limited supply I don't see much opportunity to sell all gamers a console in the first year. Then, E3 will happen next year... That is where the real fight begins.
Price is an advantage of Sony's but like last generation, MS will drop the price $100 when the real big games start coming out. The first holiday season is not strong for the games on either console. Sony has a lot of quantity but most are ports from another platform or next iterations of existing IPs. On the MS side, they avoided a large number of ports, but do not have their biggest AAA studios releasing much.
The first year of the console cycle is a "transition" period. Not enough consoles will be sold to justify a AAA investment of $100 million when you are going to sell a maximum of 5 million consoles during the holidays. Year 2 and 3 is when the consoles drop in price and sales skyrocket. At that point you have to be really ready to push your console.
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