I'll be so bold as to say that console sales are not about games (X360 had a much better first year software-wise then the Wii yet the little white box still trounced MS' console) or price (Wii still beating the Xbox360 here in Europe, despite the fact that the Wii costs €249 and the Xbox arcade €199).
What MS should do to make the X360 more attractive to the PS3 is what it adds in value compared to the other system. This is not the capabilities of software or hardware for that matter, but what it adds in you're living room. MS should market the superioritity of online play over the PS3 for instance (someone mentioned he merely got an 360 to play online poker). Or does anyone remember the "show off amazing video game skills" thread where there was a link of a guy playing "through the fire and flames" on expert on his 360 with his friends cheering him on. That would make me want to buy an X360, not a static poster or an (television)add for Fable 2.
Dropping the price on a console will not help you in the long run as a company, as long as people don't see why they need to play you're console.
The Doctor will see you now
Promoting Lesbianism --> 
