I echo the sentiment of some here. MS did gave up, but this gen only. The way I see it, if the XBX parts eventually fall in price, the console could become their mainline model and de facto system for the future. The games will not get any better and the benefits of ultra HD will probably not continue as people think of price over high quality pictures because unlike most would want to believe, not everyone has SPACE for ultra HD tv sets and when MS realizes these sales are a small fraction of actual XBX sales, they might drop the new developer rules and allow relocation of resources towards high quality textures and more realistic games.
Even if they do give up, all they need to do is keep producing the XBX into next gen. Performance beyond it's specs doesn't really climb much higher. Unless Sony decides to go for portability like Nintendo next gen, newer consoles will not attain significantly better resolutions or performance. MS has officially created a de facto glass ceiling after releasing the beast...
