A lot of people seem to be hoping or assuming that MS will just roll along as they have been and let Sony have a win.Going by the terrible E3 reveal, it's not impossible, but they've made a lot of changes leading up to launch, I'd be surprised if they weren't willing to make more if Sony start to take a big lead in the new year.
At this point I can't see what they can do to up their appeal more, Titanfall can be found on other systems with higher install bases, Kinect as a gaming app I rate on the same level as the Wii U's gamepad in terms of casual appeal and with multiplatform PS4 is going to be the lower point of entry, even if MS price cuts to parity, there can still be word of mouth that the PS4 runs games "better" and it catches on like the 360 did.
There's going to have to be some incredibly insane exclusives in the cooker, or that controller preference sells consoles.