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MS clearly as a company is moving into being a primarily cloud-services company. Based on comments from MS I have seen, I believe they see the long-term future of gaming as primarily online streaming-based, not traditional console-based.

So I expect MS is much more concerned about “winning” the long-term streaming video game market, than they are concerned about “winning” the next traditional console generation. They of course would love to win both, but I think they are more concerned about the former.

In fact, I could imagine the next console generation being the last major console generation of its kind. Sony is definitely better positioned to win the next console generation, but with Azure, MS is better positioned to win the video game streaming market.

Video game developers have many reasons to prefer a primarily streaming-based future (cuts out retailers, eliminates used game purchases, eliminates console hard drive limitations, etc.).

This is all several years in the future obviously (at the least), but since Xbox is such a small portion of MS, they can afford to think more long-term.