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Yes, i do think that Microsoft has got some room to move here. Due to the PS4's huge sucess, Sony has been underestimating the competion and having a weak year in terms of exclusives. Also, i believe they will waste time with morpheus, wich is a lesson MS has already learned this gen with the kinect.
With Sony spreading thin, if we get a focus on games microsoft can start a road to recovery here. Of course, the road to recovery is a long one, just as we saw with the ps3.