I would think that its fairly obvious what they are trying to say.
Microsoft see Sony as their main rival, as Sony's hardware is the one that is aiming at the same consumer base, HD, Online content & multiplayer net play.
At present MS see Nintendo's machine appealing to a different type of gamer and therefore don't see it as in direct competition to the 360.
Hell its so affordable I'm sure it will sell well, and I am seriously considering getting one, this coming from a European gamer! (and we all know how bad the big N's reputation is there!)