They should pay the dude. For all we know, he might have had ideas about opening an xbox-centric website for all of the various Xbox models, and XboxOne might have sounded like a cool name.
I get sort of shady feelings when big corps can sue for domain names and try to bankrupt someone who got it legitimately before them. Sure there are also plenty of squatters, which sucks as well. Maybe a solution would be to limit the maximum number of domain names any one person or corporation can have to a particular number.
Anyway, 'it should be Microsoft's regardless', .. ehh, not necessarily. Did the original guy get it legally? If so, then they need to properly compensate him, and if he wants XX dollars, that's his right to ask.