It's not about Kinect or XBox Live as much as it's about the content and the price. Many consoles in history, like NES, Game Boy, PS1 and PS2 have defied what we otherwise consider a "normal generation lifeline," and they have all done so by being inexpensive and having a lot of new games available into their 6th, 7th and 8th years.
Really, it's happened frequently enough that we ought to expect it instead of treating it like an exception. And Microsoft certainly shouldn't treat it like they are the first to ever do it and they did so with some magic equation of Kinect and Xbox Live. It has a lot more do to with a rich "second tier" of software titles after Call of Duty and Halo, like Portal, Red Dead, Kinect Sports, Batman, or whatever.
"[Our former customers] are unable to find software which they WANT to play."
"The way to solve this problem lies in how to communicate what kind of games [they CAN play]."
Satoru Iwata, Nintendo President. Only slightly paraphrased.
