Why the PS3 will ultimately succumb to the 360...

[kn]

couchmonkey said:
But, as I have asked of the original XBox, is it really a win if Microsoft buys it?

Even if MS makes a profit for the rest of the 360's lifetime, it will have to make some $3 billion to make up for what it lost in the first two years.

I do think 360 is likely to beat PS3 in terms of lifetime hardware sales, but I think it's going to be close.

 I think you are missing the point.  Microsoft is into this whole "world domination" thing.  The set-top box or whatever you want to call the "living room home entertainment appliance" is going to happen.  The Xbox, while primarily a games machine, is part of that larger picture.  Operating systems on PCs, streaming media, web browsers, and so on are all part of this strategy.  MS can not afford to cede control of the living room to the likes of Sony, Cisco, or anyone else and I suspect they aren't looking at a $3B loss in the entertainment arena as a loss per se.  I think they are looking at it more from a "entrenching themselves" position.  Imagine, for a moment, that the PS3 was very successful and was widely adopted as a "living room appliance".  Once established it will be hard to dislodge... 

I would be willing to bet that Microsoft's would be absolutely thrilled to find themselves in a strong position going into the NEXT gen so they have time to work on and perfect some of the things that will be well defined by the time the next gen comes around.