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It depends. There are several points of view here.

The first one would be profit. It they make any profit at all, it should probably be considered a success due to the losses the first Xbox caused. However, given the not-so-bad start of X360, I'd be willing to demand more. They had a good start and have been doing pretty well so far and thus they need to make even more profit or the rest of the generation will be considered a failure. Anyway, this really depends on their objective.

The second point of view is market share. Right now it would seem they really want to be the second, not the last, but at this rate they'll probably end up being the last anyway. Also, I can't see there any reason in trying to have market share itself. Of course they might be making the brand well known to provide a good base for the next console. Or maybe they're counting on software sales even if they lose money on selling consoles. I don't know. Could be both, could be either, could be neither.

The last point of view would be preventig Sony from being successful. Why would they want that? Well, I've not read very much about this but it does make some sense. There's the chance they're afraid that Sony and PlayStation will become a threat to Windows - MS's source of money, that is. With PlayStation becoming more and more of a computer for a casual user (net, multimedia, games etc.), there will be less need for a seperate computer unless you need something more complicated. Right now PS is not a very big threat (even though you can install a new OS on the PS3) but who knows what the future will bring along... Definitely Sony seems to have the direction MS could be afraid of. Anyway, from this point of view Xbox has proved more or less successful though MS will probably want even more.

A tought question really. Depends on a few things so there's probably no definite answer.