I'm not referring simply to games. When I said "their game", it referred to their strategy and objectives, their
gameplan, if you will.
When Xbox first released, it did have the most powerful hardware, but developer support was slow, Xbox Live was nearly nothing, and Microsoft spent a lot of money on expensive hardware licensing and advertizing to get their first console off the ground.
This time around, they not only have a rich developer base already in place and a more efficient hardware supply line, but also an Xbox Live network with multi million subscribers already in place as well as a well-known name (even amoung people who prefer other consoles).
I'm not stating any opinions here, these are just simple facts. Starting a console for the first time takes a lot more resources than continuing a console lineup on an existing basis. Thus, Xbox360 has a better chance of surpassing the Xbox and a better chance of strongly contending in the console market.