I believe it already IS competitive.
Considering it still isn't out in several European countries, and that they aren't counting on it selling AT ALL in Japan, it's doing pretty good.
It's on track to outpace the Wii U by Christmas, and on track to earn a lot of money in the US with the services it is offering.
I see very little reason why Microsoft would take an extra 100-200 dollar hit on each unit sold at this point.
If losing its biggest market is to be competitive then I don't know what is to be competitive... Xbone is just racing right now like some guys do just to participate in a race... like Wii U.
And I can bet with you Xbone won't outsell Wii U this year.
Edit - Just to be clear there are a little difference between "compete" and "to be competitive"... the first is just participate but the second is to be strong enough to be into the favorites to win.