Seems to me that Microsoft blew a lot of money spinning it's wheels. They do indeed have Bungie/halo, but other than that, I don't think they've really got much that entices gamers beyond what Sony does. The brandname is semi-relevant, but it's not enough to make up for other faults. Look at what both Sega and Nintendo have gone through. A single generation can turn your empire into rubble. Sony had best remember that as well.
I think the most important thing for a console is to have atleast one "must have" game out at any given point. Sega had the original sonic games, Nintendo has mario (though lately Zelda and Metroid seem to be driving their console more than mario), Microsoft has Halo, and Sony has the FF franchise plus a number of other games. Almost everyone I know has bought a particular console primarily for one game. I pretty much have a gamecube for the windwaker, and a (used) xbox for fable.
The only reason I'll buy any of the next generation consoles, is if there is a game on it that I want so badly it drives me to cough up the money to buy it. I think a lot of people are like this.