Given the gap between the Xbox One and PS4 what will the the Xbox One's next big move be to narrow the gap.

Last year the Xbox One had a few more cards to play such as dropping the Kinect to lower the price, Titanfall launch and the price drop that provided a big boost to sales.

This year it seem's that the exclusives favor the PS4 this year, especially early on with the Order 1886 and Bloodborne. And whie I have no idea the manufacturing cost of eithr console PS4 may now have more wiggle room for it's own price cut.

What can Microsoft do to narrow the gap?

Best thing Microsoft could do is get more exclusive games at this point. This year will probably be a lost cause (unless they have been keeping a lot of secrets). However, they can make some investments and get some good momentum and good will if they make a lot of really good announcements at e3...

Microsoft'll pay people to get the Xbox One.

Holo Lens is the only thing they have with win 10 integration for multimedia. As far as gaming goes, PS4 has the advantage on lockdown. The gap is still growing and will continue to do so.

What they need to do is just focus on delivering quality exclusive games. A few megatons at E3 could help, but it will take a lot to actually pull ahead of what the PS4 already has. With TF2 possibly going to PS4 as well and RotTR probably coming to PS4 in 2016, their short term gains with timed content is giving people less of a reason to buy, and it is not going unnoticed

more timed or exclusives 3rd party games announced at this yrs e3 price will go to 300 this fall

id like to point out that while the xbox one did outsell the ps4 in the us, worldwide it never actually sold higher per month, so the gap has been increasing constantly.
its unlikely at this point that they can do anything to close the gap, just varying rates of slowing the gaps increase.

How about instead of "winning" they focus on being a viable part of Microsoft's business? It's not like they are heading for original Xbox sales, they're heading towards a comfortable install base even if Playstation wins. They need to achieve a sustainable business model with Xbox. As in, have Xbox One be profitable.

Make Holo lens exclusively for Xbox One, and cancels for PC. It will push the the consoles before Morpheus coming to PS4. and also they need to the same thing like with holiday bundle but they need to do every month. Redefine their brand color by adding more variation on games and more exclusive marketing games out side FPS genre and American Football, then they will at least made some improvement.

New Slim that launches with Halo 5 is the best I can see them doing.  Oh and it launches at $300.

Step 1.) Get GTAVI as an exclusive.
Step 2.) Bundle said GTAVI with new, slim model.
Step 3.) ???
Step 4.) Profit.