If MS doesn't come 1st next gen or the gen after , should they pull out ?

[Alby_da_Wolf]

In fact, while I believe MS wishes to prevent competitor console makers from becoming strong enough to seize the living room computing, I don't believe by any means it plans to destroy the console market, it's an impossible task, like you wrote, and the best MS can do is live with it, and if possible, try to profit from it and have some synergies with some of its other products. This said, the danger that still Sony, or, currently more likely, Nintendo tries to do what MS fears is still strong, and the only way MS could prevent it is to make XB720 become the first console next gen and make it the best choice of media hub for people not wanting to get stressed by a PC. The danger this gen is still low, PS3 has too little RAM for the task and it's the weakest contender, Wii is the strongest but it has even less RAM, no disk storage and no DVD playback.
To cut it short, this gen Windows was pardoned by PS3 weakness and more generally by HW trade-offs, but next gen each console will be able to become a media centre PC even without their respective manufacturers actively promoting this function, so the stronger XB720 will be, the less sales "stolen" from Windows will go to MS competitors and the more will obviously go anyway to MS.