Does Microsoft have the upper hand now, or is Sony still ahead of their game?

Nope

Microsoft has made bad choice after bad choice, and when they finally stomped on every form of consumer available, they had to take it back. The hardcore and the casual would have both suffered, and the Xbox got rolled back to a Xbox with more power (which is all anyone really wanted.)

Considering all the CRAP they are pushing that the hardcore gamer doesn't want for a higher price, I think sony is winning between them, and WiiU might have some surprises coming (and has the best 1st party lineup overall - you can't deny simple facts like Pokemon and Mario being among the top sellers of all time.) But Xboxone is pretty much scraping the bottom of the barrel, despite being more powerful than WiiU (about the only exclusives worth mentioning are going downhill or have a very VERY small player base compared to Nintendo) so if you want to be safe for good games, PS4, and maybe a WiiU on the side. Grab a 3DS while you are at it, awesome handheld, and a PSVita if you don't get a WiiU (for the streaming games).

Xboxone has nothing of value to offer anymore, and that is something Microsoft needs to address, and fast. (I will freely admit I have never liked Xbox/360, and for good reason - now I feel especially justified. I am not the biggest fan of Sony, but I am more pissed off with the game developers than Sony themselves for my favourite franchises going south. Nintendo has my most support right now, other than my PC, but thats because I can usually find something decent to play on my 3DS - its backwards compatible all the way back to the NES with the ESHOP, suck that Sony/Microsoft.)

Does it really matter? Neither console can even compete on the same level as the PC, so just ignore them.

Steam=service+DRM, Publishers are agaisnt game trading and since the consoles wont have DRM, means PC will get more games :D i can see clearly the winner

Much more expensive, weaker hardware ( though not by much ), possibility of redaction of their no DRM policy ( a definite possibility, remember OtherOS on the PS3, anyone? It's just another firmware update away. ). I'm not going to buy either, but the only thing Microsoft has going for it is that their network offers a much better way to interact with friends, unless Sony really stepped their game up with this release.