According to former president of Microsoft’s Entertainment and Devices division Robbie Bach, Xbox 360's success is partially due to the lackluster launch Sony had with the Playstation 3. You may remember that Sony struggled to get its product off the ground with it's $599 price tag, along with its horrible online component at launch. Bach, though, believes that Microsoft quickly hit the ground running, capitalizing on Sony's mismanagement:
“Some of the success of Xbox was due to the fact that Sony did some really not so smart things,” Bach stated. “They mismanaged their 70 percent market share. It’s a long conversation. The transition to PlayStation 3 was really, really bad… They mismanaged their partners, they mismanaged their cost structure. They made their next platform so complicated that developers couldn’t develop for it.”
Bach also believes the 360 owes a lot of its success to the publisher partnerships Microsoft was able to make early on. “When you're doing a startup, you need friends. It's just the way life works,” Bach added. “It turned out we were able to convince retailers and publishers like Activision, Electronic Arts and others, that it was a good thing for Microsoft to be successful, because if we were not successful, the only game in town was Sony. Being dependent on somebody else was bad for them, and so they supported us disproportionately to what they should have, mathematically.”
While I definitely agree with several of Bach's points, I do recall Microsoft struggling to get itself "off the ground" with the whole Red Ring of Death fiasco that plagued thousands (if not millions). Heck, I went through four Xbox 360 before the Xbox 360 S was unveiled at E3. Nevertheless, Microsoft did capitalize on some terrible front-office decisions at Sony, and it's definitely attributed to the Xbox 360's sales the past year and a half.