I think the same way, that's why I want Sony gone.

I want what your smoking

If they did do that, that would be an Xbox 720 and then Sony and possibly Nintendo would try to one up them by doing the same or more and before we know it we are in the 8th generation of videogames.

Microsoft is not in the console gaming business to make money. They are in the console gaming business to bring competition to Sony. No matter how much money they lose, or time they invest, they will not leave the console gaming business until either Microsoft dies, or Sony stops making the Playstation(unless investors demand it, but they never have and they very likely never will, especially when Obama keeps bringing up their brand in every other speech). F'n with the Playstation is the current goal(see competition disruption), and the Xbox is the monkey wrench for their plans.

You see, a few years ago, when the Playstation was released, MS was already in the gaming business on its Windows platform. However, Playstation and Nintendo were mounting serious competition to Microsoft in this respect. So, they cooked up the Xbox brand to disrupt the console gaming market, so they could gobble up a larger piece of the gaming pie, and bring down their competitors as MS is prone to do.

It's actually worked, if you look at their second generation console. It's actually outsold the Playstation console at this point, by a significant margin, and if it does "lose" this generation, it will likely be long after their next Xbox is on the market, and then only by a slim margin.

As for your question of "what if the PS4 is as popular as the PS2 again" that's impossible. The days of console dominance of that scale are gone. The fanboys have seen to that. There will never be a dominant console again, amongst core gamers. We are split. The PS2 came along at a perfect time. After a great previous generation, at a good price, containing new and accepted tech, DVD, with good launch titles, and most importantly, terrible competition. The Gamecube had a huge kiddy stigma at that point and time, and the Xbox was too expensive, and had a "doomed to failure, don't invest your money in this thing" stigma going for it as well, along with a lackluster lineup. The only choice for gamers really was the PS2.

No console shall ever again have an equivelant exclusive lineup, because everything is moving multiplatform. The advantages the PS2 had, simply cannot be had in today's gaming environment without casual support at a significant percentage. You might see a console do better than another one, but you won't see a dominant one at the level of the PS2 vs competition(again, I mean "without significant casual support" here). It's an impossible dream, especially with the brand recognition and prestige the Xbox has garnered in North America, gamings most influential region(imo).

...so no, no they won't. In fact, I think out of the big 3, Xbox is the second most secure brand.

You realize that the PS3 is at least 2 full generations behind state of the art right, more like 3 for the GPU?

What I described is a more a 540 than a 720.  That fits with MS's concept of forward compatitabilty.  540 could easily get them to 2113 and be able to smoke the ps3 with 60 fps, 1080p and probably 3D.  It wouldn't even really require much if any extra development to support the higher res, just have the game detect which version of the 360 the consumer has and if it is the 540 then render at higher resolution and use more AA.

You realize that the PS3 is at least 2 full generations behind state of the art right, more like 3 for the GPU?

What I described is a more a 540 than a 720.  That fits with MS's concept of forward compatitabilty.  540 could easily get them to 2113 and be able to smoke the ps3 with 60 fps, 1080p and probably 3D.  It wouldn't even really require much if any extra development to support the higher res, just have the game detect which version of the 360 the consumer has and if it is the 540 then render at higher resolution and use more AA.