This is a bit trickier than you make it out to be though as Microsoft no longer have an XBOX division but an entertainment division. So even though the entertainment division made a loss it doesn't neccesarily mean that the XBOX 360 isn't profitable at this time. With things like Zune lumped in with the 360 it's easy to see why there was a loss for the division.
RROD was the biggest problem and without it I think Microsoft would be doing far better off and they know that so I'm sure that's one reason to continue. Which means they know themselves that have done most things right this generation.
They also had an original plan of basically:
Gain a foothold -> build a userbase -> take over the market
So if they pull out now they are not following through with their plans and moving back to the whole RROD issue: If Microsoft believe in themselves that they have done things right this generation and I think many can argue that they have, then why waste all the money they've layed down to get a foothold and gain a large userbase, both of which they have succeeded in when they could actually have done even better this generation?
Imagine if Wii hadn't taken off like a rocket, it fizzled away, imagine the 360 having normal hardware mulfunction statistics within say 5%.. XBOX 360 would be market leader, I'm sure many would agree..
Microsoft will come back next generation with a new console to try and snatch the goal of market leader away from Nintendo. You can count on it. It'll also make sure developers stay on the DirectX platform continue Windows gaming.
