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Sony has the more powerful system again this gen, They just made it easier to work on this time around. A more powerful console does not make a system better, exclusive content does that. PS3 had the more powerful system last gen but struggled to make multiplats look good, but their exclusives were their saving grace.

This gen MS will either need to make more exclusives via first party, or purchase them from third party. (Not really a big deal) but they need to have exclusive content that can only be played on their system. Nintendo has kept their systems afloat by 1st party games alone since 3rd party is non existent.

To further clarify my point about purchasing 3rd party exclusives, I never saw a problem with a company doing this. If MS is going to front the cost to make a game exclusive to their system, at least they are keeping developers working. This was MS gameplan in the PC area, they just created the software, and let the hardware manufactures compete against each other. Until recently with the Surface, and Phone.

I think MS will have to just enjoy 2nd place. One benefit for MS is that I think this gen will be cut short due to 4k TV's on the horizon. Also if the surface pro's are any indication of what MS can make in terms of hardware, then next gen should be pretty interesting. I actually see Nintendo coming back really strong next gen also.
Hooray for gamers!