Exactly. And I've said it before, PS2 only sold as many HW units as it did because it had a ridiculously long life, which helped contribute to PS3 having a LOT less units sold by the end of PS3's life (amongst other reasons). But as you point out, it's about profits, and that's why PS4 is tanking now and PS5 is thriving, and it's also the main reasoning behind why I think Nintendo will cut the cord on Switch 1 in 2023 to fully embrace Switch 2. All about profits, which you achieve on newer systems with excited fanbases willing to pay full price for new games, full price for consoles, and full price for accessories.
Software sales will be a joke in 2023 for Switch 1 compared to what Switch 2 could do, just like they are a joke right now for PS4 compared to what PS5 is doing.
Long life the 6 year cycle!
Systems have the highest profit margins when they are old. Hardware manufacturing costs are low, and software sales often continue to be strong for 1-2 years after hardware sales have dropped significantly. The hit games are already made, so development costs are already spent. At that point it's almost pure profit.
On the other hand Sony especially has always had a business model where they take a loss early on, because they know they'll make better profits later.
curl-6 bet me that PS5 + X|S sales would reach 56m before year end 2023 and he was right.
My Bet With curl-6
Switch Will Be #1 All Time
Zelda Will Outsell Mario (Achieved)
How Much Will MH Rise sell?
My Bet With Metallox