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I dont think they will.

If they do really really bad, maybe. Then you release a no-Kinect SKU for 399, or even 299 soon as DDR3 makes XB1 way cheaper to produce than PS4.

But I dont see them doing badly despite all the hubbub. I think they're already at least even with PS4 in the states and gaining daily since the DRM debacle.

I think it's also possible Kinect could end up proving a big selling point of the console, particularly towards females (fitness games etc) and families. In fact I think Kinect could easily propel the X1 to outsell PS4. In that case, removing it would actually hurt them. But we need a year or so of sales to tell if this is happening.

We core dont like Kinect, but we need to understand where it's aimed.