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Well Nintendo did well financially with the Gamecube, so no matter what they are laughing.

One of Microsoft's main objectives (if the THE main one) is to take out Sony or at least contain their presence in living rooms. If they take out the Playstation and any other multi-media player/computer Sony plans, then I think they would be okay with Xbox dying as well.

Sony is the one most at risk. Not only is the PS3 vital to their game division but also Blu-ray, and digital distribution plans. They will fight hard to carve out a profitable niche (at least), but if Microsoft prevents that completely (profitability) then they may have to let that dream die and restructure the company.