It would bother me if there wasn't another player to step in and fill the void. I don't make allegiances to pieces of plastic and printed circuit boards -- if there are a lot of games on a particular system I want to play, I buy that system and those games. As long as those publishers remain healthy and continue making the games I want to play for *some* system, I really don't care who makes the system.
That said, Microsoft (specifically) NEEDS the competition, because they have a near three-decades long track record of handling markets very poorly once they control a platform and are no longer pressed to innovate. I think at this point it is apparent that Nintendo is seeking a completely different market, and that market isn't necessarily the one I want MS to also be pursuing at the expense of the big N and the core gamers.
The absolute worst case scenario for all of us would be for Sony to get out, have MS fill that power vacuum on the HD front, then have MS derail the 360 and alienate the core when they decide to turn their sights fully on Nintendo.
As long as MS is focused on Sony, and Sony on MS, both companies will make better hardware AND better software, and all of us can reap the benefits of that.
