Microsoft has already won this generation. Will they be #1? No. Will they be #2? Probably not. But the important thing is that they will by generations end have an instalation base larger than that of the Xbox and already has superior software sales.
Microsoft has expanded their share in the market, and more importantly they've almost single handedly duped Sony into playing the Technology Arms Race which crippled the Ps3's chances for another successful console.
If Sony can stick out what it did last year, I think the 360 will be more than content to survive at its current pace, turning a profit on each console and offering thus far, the best game library without question.
People so badly wanted us to believe Sony wouldn't leave gaming despite the horrors of the PS3 last year, yet now those same people want us to believe the 360 is doomed now for not even a fraction of the hardship the PS3 has endured. Though I'm sure you'd like us to believe Sony is so capable of adapting and MS isn't.
1: Stop making shooters. Please. You're not Valve or Free Radical.
2: Stop trying to force photo-realism down my throat until you can get out of the uncanny valley. Work on style and presentation instead of just pixels and bloom.
3: Try something weird and new, and hope we like it.
You'll cut costs way more than you cut revenue, and thus increase profit.
