I see this story and I'm reminded of a similar one. It takes place about seven or eight years ago, except instead of Microsoft sounding arrogant like they'd already won the competition, it was Sony. It was Sony that had come right out and said that 700 Dollars (American) would be alright, people like Sony products and would continue to like Sony products, so the people will continue to BUY Sony Products.
And it bit them in the ass. Lots of dropped 3rd party support (the back bone of any console, even the Wii U is going to have to deal with that elephant sooner or later), stalled consumer base until... what, two years ago? Admittedly, they had exclusives that I was interested in more than on the Microsoft side of things (Infamous and Uncharted intrigued me more than Halo and Gears of War), but their stance on "people are going to buy it anyways" annoyed me. The 360 got way more game time / game purchases on my end. I liked their earlier exclusives that WEREN'T the two I mentioned above (Mass Effect, Fable 2, Forza for some strange reason as I usually hate Sim racers and prefer things like Burnout), and any multi-plat game that came out I picked up for 360 for achievements. Not loyalty, but a freaking number.
Sony saw what happens when a console company makes regulations and restrictions on what the consumer can do, and decided that it wasn't actually a foregone conclusion that people would buy PS4, so they made it more attractive by having no online check ups or extra fee's for used games (online passes are still allowed but hell, for some reason they're allowed now so that's not a change, that's just keeping current instead of changing), and truth be told, a lot of the arrogance of a few years past has left. Instead, the people buying the systems showed them that competition exists and that the 360 could hold it's own against the juggernaut of Sony's Playstation.
It reminds me of something that Paul Heyman once said: Sometimes you need to get your ass kicked. Because then, you know what you're capable of, you're going to come back hungrier, and not quite wanting to get your ass kicked again. Sony learned.
And Microsoft picked up on Sony's arrogance and self-delusional "They'll buy it for the brand name instead of what the actual content is" mentality. The mirror image from the last gen's announcements just astounds me to no end.