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The two things that are "hurting" Microsoft as it relates to the PS4 are:

1. Lack of diversity in first part options.

2. Their clear focus on a shared platform for XB1 and PC.

The 2nd item is why I put the " around hurting. I think their change in strategy is brilliant despite the fact that they are going to cannibalize their own hardware sales with XB1 to some extent. I don't think Microsoft sees as much opportunity in console hardware as they do in subs and software, thus the change over in philosophy.

Also, so long as they are profitable in their gaming market they are competing. The "must be #1 in sales" thing is a console war driven, not company driven, narrative.