They won't be able to have a significant HW advantage unless they delay the launch for over a year, they can have all the money in the world but AMD is only capable of so much and MS has to face the same issues Sony does when it comes to heating, pricing and power draw. MS won't be dead in the water if they aren't more powerful, there can be more than one successful brand, McDonalds sells far more product than Burger King but they both have existed in the same market for years.
MS is in it to try to make money (as they all are) they aren't in it for bragging rights, yeah being number one will mean they make more money but at the end of the day if they are able to bring in enough money to make a decent profit that should be fine. They will never be what Sony is globally in the games market, they've had 3 generations and haven't made inroads in most of Europe or Japan, if anything they've gone backwards. Xbox fans need to realize their console will never be number one globally in sales, that doesn't mean that xbox can't be successful, if MS didn't think they could make money with it they wouldn't bother with it.