the price of sony's next machine will be the biggest factor of how the next xbox does.

Same here.

Basically for me its the price of Live (I really don't care for it), exclusive games beyond Halo and Forza, and the ability to make compelling hardware that doesn't feel like plastic crap.

Xbox Live still charges $60
PlayStation 4 having a larger first-party developer base
Kinect 2.0 required to use the Xbox 720.

Mostly 2 things.

1. Xbox live gold subscription beeing necessary for online play when the competition offers it for free.
2. Lack of faith on Microsoft game studios to come up with compelling exclusive software or platform exclusives.

Reason i purchased a 360: Had several JRPG's exclusive to the system and it was significantly cheaper than the PS3 (out sooner aswell).
I dont see Microsoft gathering the same japanese support they had at the launch of the 360 and i dont expect them to be significantly cheaper than what Sony will have in offer (though they can take the losses for that).

I dont see many strong points in their favor at this point. They have alot to prove after they have left the 360 to dry on these last 2 years.

Well for me it's 2 things.

1: If Sony add party chat with the PS4 while keeping online free then I really think Microsoft will have a tough
sell when it come to xbox live gold.

2: If the rumors are true that Kinect will be built into the next xbox then it seems like a bit of a gamble. I mean
it's not a cheap thing to do and could inflate the cost of the next xbox considerably.

Japan and shooters dying out.

I don't see how Japan really is an "obstacle' for MS.

The Xbox never being successful in Japan has not hindered the overall performance and success of MS and Xbox. An obstacle would be it would something big enough to 'block' the Xbox from being a major success but clearly this gen shows that despite being unsuccessful in Japan, it has solidified itself as a mega popular gaming console overall world wide.

An obstacle for the next gen Xbox would be something like New IPs and exclusives. Because eventually what matters for a game console is what games does that game have? I don't think anyone buys a console NOT to play games and you need the games for people to find your console attractive enough to buy.

Microsoft really made a bad first impression with the 360 you know the RRoD so i will wait to see if they do something similar with the 720.

BAHAHAHAHHAHHAHAHAHAHA