The public reaction to the XBox One at E3 was catastrophic. Microsoft is making an all-singing all-dancing entertainment device while Sony is making a pure gaming machine - this allows Sony to charge less and have more to show off that interests their core audience.

Microsoft also made some DRM-oriented plans related to used games that they've had to intensely backpedal on, and this really hurt them.

Basically, Microsoft completely disappointed and enraged the biggest hardcore gaming fans. It's worth asking whether those fans represent the entire market, but they definitely have a huge marketing footprint. You might see MS recoup this loss when they start getting demo units up with their impressive TV features and home automation stuff and whatnot. If MS can really produce a killer app for the Kinect (which is integrated into the One) they could do some damage - Sony has completely backed off on their plans to provide a 3D Move camera as a bundled feature of the PS4, which allows them to whoop MS on price, but also means they'll be in trouble if something makes the camera a "must have" feature.