Giving up on Kinect means giving up on the last thing that gave this console any semblance of identity or vision, and will only damage the brand for -maybe- modest short term success at a lower price point. Without it the console loses its only advantage over its direct competitor and it won't take long for people to figure that out.
Cutting the price 20% in the first year will burn early adopters and make wait-and-seers suspicious; whose to say another cut won't happen again in the near future?
The revenue left on the table in order to do a massive price cut will only keep the Xbox division in the same holding pattern it's been in since 2001. Will the company tolerate another generation's worth of a cash sinkhole in order to keep chasing the living room domination? It's clear as day that XB1 was supposed to be the final phase execution, but the 180s have already complicated that plan. They need to see numbers in the black yesterday.
There's no good way out of this situation for MS, I think. It's a shit sandwich no matter what they do. Sony managed to wade its way out of the fumbled PS3 launch with smart manufacturing economizing (slowly phasing out backwards compatibility over about a year's time) and adding more value alongside price cuts. Taking out Kinect seems really boneheaded.
Sony has always been the king of hardware. They are the best at quickly reducing chip sizes, reducing manufacturing costs, releasing "slim" model hardware, and most of all, FOCUSING ON GAMES.
Lets be honest, MS fucked this up royally. The 360, aside from its initial hardware issues (RRoD) was an awesome game console. For its time (Just like the OG Xbox before it) was cutting edge tech, was an easy console to develop for, had a year head start, and the best online gaming service period.
Mid way through the 360's life, MS just stopped caring about creating new IP, or any IP outside of Halo, Gears, Forza, and Fable. They tried to jump on Nintendos band wagon with gimmick motion controls with Kinect, and despite it selling gang busters initially, just like the Wii fad it completely fell off, and was never a real factor for developers or gaming in general. By the time that was clear and apparent, i'm sure MS was already knee deep with their plans for Kinect 2.0 and it being packaged with their next console.
Then the reveal of Xbox One, it was about Kinect voice control for UI, TV input, and BTW, heres a trailer for COD Ghosts which was a current gen game anyway. Then we find out about always online, strict DRM, Kinect mandatory, no used games. The cherry on top? weak specs for gaming.
MS fucked up when they decided and thought an "all in one entertainment device" was better than a true next gen game console. The Xbox brand is established as a GAME CONSOLE, that yes, does other good things, but once you GIMP the gaming aspect, Kinect, TV, media, skype, none of that shit matters without the best looking and playing games. All at $100 more than their higher powered competition.