They've failed on a new level, if you think about it. The First-Party Exclusives are practically non-existent, the ones they do have are all quite bland looking. Even Forza 5 didn't really catch my attention and that makes me sad because I'm a massive Forza fanboy. They didn't bother explaining the DRM situation or the fact that the Kinect stalks you in your home. And of course the price point (which honestly, I've been saying for months it would be $499) is high and a lot of people aren't going to be pleased with it piled on top of everything else.
Microsoft hasn't made a gaming console, they've made an entertainment box and they've lost touch with their consumer base. There was a time when they were a powerhouse to be reckoned with but all Sony has to do is make a solid presentation and focus on games and they'll easily win people over.