First, I think he misunderstood what Iwata meant. Iwata was talking about not trying to match strengths with Sony and Microsoft but to rather concentrate on their own strengths.
Second, he's somewhat right about how people perceive the Xbox brand, though that really isn't Microsoft's fault. People were getting a little crazy by assuming that the Xbox brand would grow market-share at the same rate as the 360. That was really unlikely from the very start.
In reality, the Xbox brand is still weaker, globally speaking, than the Playstation or the Nintendo brands. It's far easier to grow from zero than from a close third. It took everything lining up perfectly for the 360--the biggest FPS at the time, a year's head start, monumental mistakes from Sony--the odds were against the stars aligning perfectly once more. They're going to have to fight for every inch gained this generation.
