Microsoft just has not been aggressive enough, but they have built a solid foundation that should serve them well at some point. I disagree Microsoft absolutely needs Japan, even if they could certainly use it. I also disagree they should just make toys.
Selling hardware at a loss has worked just fine for previous console losers, and with big enough penetration, it will continue to do so. The only companies it hasn't worked out for are those who moved less than 10 million units. The number's higher now, but none of the three should have a problem achieving profitability.







