XPS is Microsoft's attempt at a universal document format as PDF is Adobe's.
It allows Microsoft to include this functionality without having to adhere to the PDF standard.
At the moment the file size alone will, I feel, prevent XPS making any inroads into the domination of PDF in the market.
If Microsoft include a killer function in XPS that is not possible with PDF then it may do better but even then I think that it will be virtually impossible to even approach the dominance of PDF.
The fact that XPS is inbuilt into the OS may have an effect but at the moment it is not being pushed that hard even by Microsoft, who produce PDF versions of all their XPS downloadable documents