I think this whole situation is pretty amazing. While I think the XB1 is a decent machine, Microsoft's bad early decisions combined with an amazing PS4 PR campaign meant Microsoft has been struggling every since. They have done much to slow the bleed, but they knew they needed to take drastic measures.
We all sort of expected a hardware revision from both MS and Sony, which would likely buy 2-4 more years. MS said f*ck that, and announced not only the S model but also a full 4k 60fps capable console that is expected as soon as 2017. As icing on the cake, it will be 100% compatible will all XB1 games and peripherals. This is a huge deal because it means gamer won't be so hesitant to buy into current gen knowing that they can take it with them.
I honestly don't think Sony expected this. I bet they weren't preparing to field a new gen until 2018 at the earliest. It remains to be seen if MS will actually pull it off, but if they can do it it this will be huge for them. With keyboard/mouse support coming to XB1, the Xbox brand can quite literally be a windows PC, although the interface will be different.