I agree with this assessment but I'm baffled at the idea that they'll find a market out there for a device like this.

Baffled, really? Home consoles today are being used for more hours to watch netflix and the like than they are for gaming. The original Wii sold a bajillion units on braindead hardware by appealing to kids, parents, and grannies with kiddy motion games. More and more people are getting their gaming fix from simpler experiences on much smaller devices. And neither console, despite their GPU improvements, represents the kind of leap over their predecessors as the previous generation did.

I agree with your assessment that Microsoft has foregone the high-end, but I'm baffled why you're baffled :)

Here's the scene I predict all across the US this holiday: 10s of thousands of parents, standing before Xbox One and PS4 displays, realizing that they can get an Xbox One, a game, and an extra controller for the price of the PS4. That mom and dad get all the cool TV/VoD integration when the kids are away, and that little Suzy can play all these neat Kinect games when her older siblings aren't using it. That Billie is always excited about new CoD maps, and that those are coming to XBox One first. Dad's in love with the ESPN and NFL content, and the fantasy sports integration. Mom's in love with the TV content and skype integration.

Do I think there might be a number of 16-30 males jumping ship to PS4 this generation, sure. Do I think that MS will more than make up the difference in appealing to a broader audience, even surer. PS4 is the stronger proposition if all you really care about is gaming, Xbox One has the stronger proposition for everyone else.

I don't know that Xbox will launch at a lower price, but given the difference in hardware choices, that's my prediction. We haven't seen a price disparity between similarly-capable hardware since the Saturn vs. PSOne, which we all know went to the unproven, but less expensive newcomer. I think price will have a lot of sway, especially in this economy. And Flying Spaghetti Monster help Sony if they have yield issues on their massive SoC, or supply chain issues with their unprecedented need for high-capacity GDDR5 chips.

I'd guess we'll see the differences in a few years when both consoles pass the middle of their lifespan in the market with developers pushing more and more each platform's specific strengths.

Right now I'd expect very little difference on multi platform titles. I'm more intrigued about what the x86 (x86_64?) transition will mean on the PC side of things...

Here's the scene I predict all across the US this holiday: 10s of thousands of parents, standing before Xbox One and PS4 displays, realizing that they can get an Xbox One, a game, and an extra controller for the price of the PS4. That mom and dad get all the cool TV/VoD integration when the kids are away, and that little Suzy can play all these neat Kinect games when her older siblings aren't using it. That Billie is always excited about new CoD maps, and that those are coming to XBox One first. Dad's in love with the ESPN and NFL content, and the fantasy sports integration. Mom's in love with the TV content and skype integration.

Do I think there might be a number of 16-30 males jumping ship to PS4 this generation, sure. Do I think that MS will more than make up the difference in appealing to a broader audience, even surer. PS4 is the stronger proposition if all you really care about is gaming, Xbox One has the stronger proposition for everyone else.

I don't know that Xbox will launch at a lower price, but given the difference in hardware choices, that's my prediction. We haven't seen a price disparity between similarly-capable hardware since the Saturn vs. PSOne, which we all know went to the unproven, but less expensive newcomer. I think price will have a lot of sway, especially in this economy. And Flying Spaghetti Monster help Sony if they have yield issues on their massive SoC, or supply chain issues with their unprecedented need for high-capacity GDDR5 chips.

On the other hand, we could have a scene where shoppers go out and here's what happens: the parents won't be sure if they really want this integrated device thing, while the hardcore gamer kid will almost certainly be against it. Who does that really leave? The casual gamer? Microsoft would really have to advertise their console, way more than Nintendo does.

Mostly though, an integrated home entertainment system does not have a market. Are people really going to spend $300+ on something so that they never have to pick up a remote? You can get Netflix, etc, on the PS3/PS4, and beyond that, the ability to switch to TV or a movie without a remote seems somewhat pointless. Are you really that lazy that you cannot pick up the remote, switch the input, and pick up another remote to turn on the other device? Most households will have how many devices connected to one TV? 3? Are people really going to pick this up just to be able to change between three inputs without any remote? For the average person, that seems pointless.

Moreover, the Wii did very well because it advertised a new kind of gaming, and initially, it did deliver a new experience. The Xbox One is trying to be a console, but not focusing on the console aspects. Whether it will appeal to people beyond the mainstream is questionable at best.