I believe it already IS competitive.

Considering it still isn't out in several European countries, and that they aren't counting on it selling AT ALL in Japan, it's doing pretty good.

It's on track to outpace the Wii U by Christmas, and on track to earn a lot of money in the US with the services it is offering.

I see very little reason why Microsoft would take an extra 100-200 dollar hit on each unit sold at this point.