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Shameless said:
I feel sorry for Microsoft. They've had some amazing exclusives and easily the best library up until recently and they're still struggling. It's a shame really.

This much is true.

The funny thing about this generation is that it may be the first where the console with the best games comes in 3rd place.

If you look at the sales charts here, you'll notice that Microsoft, as a software company, sells very few games on the 360. What little money they receive they need to get from hardware. A price cut would just eat into their profits more. Microsoft, at this point, is concerned about breaking even.