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I'm reading a lot of posts which go along the lines of "7th gen proves that wrong."

Well, yes and no.

Sony is making money hand over fist with the PS4. It's one of a very few product lines Sony is doing well in, and even if Sony as a whole goes bankrupt, they will not bow out of the console biz.

Microsoft, however, is in a much shadier position. XBox does break even or even makes a small bit of money, but because Microsoft reliably makes money with Windows and Office, it's one of Microsoft's weaker brands. Microsoft got very lucky last gen with Sony's inept PS3 launch. If they get sandwiched between a strong Nintendo and a strong Sony console, they will bow out.