MS will leave the gaming market if Sony sells millions PS3 slim (which will happen).
MS doesn't have the studios, exclusive games and more generally content to compete on the long run.
MS strategy in gaming was to kill the PS3 as fast as possible. Since they failed, it's over. You can't compete with 3 studios when your competitor has 30+.
They'll go back to windows and office, which are suffering too by the way.