Costs too much money to pay annual salaries for a number of large, talented development houses. MS does better to secure 3rd party exclusives that they help fund and advertise to build up the initial lineups for new console generations first few years.
Seriously, look at how many somewhat talented dev houses got bought by EA, Activision, etc and ended up being closed after a couple of games didn't sell what they expected. Now they don't exist anymore because they were too expensive to pay for staffing. Even Sony knows that to some extent (never bought Insomniac).
Time for gamers to start seeing the gaming business world AS IT IS instead of how they think it is.
http://en.wikipedia.org/wiki/Sony_Computer_Entertainment#Software_development_studios
http://en.wikipedia.org/wiki/Microsoft_Game_Studios#Software_Development_Studios
