They are making money now. It would be stupid to pull out.

Unless Natal is going to make them bleed money theres no logical reason to discontinue the xbox brand. However, I do agree that it would be stupid to go next gen without generating a early profit so that MS can continue to recoup the costs that the original XBox brand caught them. People tend to forget they lost billions on the original XBox and will make a profit on the 360. MS was in a lose-lose situation with the original XBox and thats not the case anymore with the 360.

Investors are really shortsighted if they want Microsoft to focus only on computer software, essentially transforming Microsoft into a pure software company.  Market growth is going to be concentrated in the mobile market and Microsoft would be crazy to abandon its efforts there.  Microsoft is the best positioned tech company to leverage their existing products and services to provide customers with a seamless experience across all devices.  This means people can interact with their data anywhere they go, be it on their phone, on xbox live, or on their computer; Microsoft could be the first to fulfill the dream of "the cloud" where people no longer worry about their data because it is always with them.  To realize this dream both hardware and software need to be designed with this in mind.  Sure Microsoft could drop their hardware division and focus on the software necessary to pull this off, but what happens when the hardware makers (Sony, Nintendo, Apple, Google?) don't play nice and close off their devices from working with Microsoft products.  This doesn't even have to be an overt decision by the hardware makers to insulate their products from Microsoft; rather, just the fact that it is developed out of house may preclude the devices from working together.  The next generation of devices are going to need a common software base or rigorous communication standards in order to deeply integrate with each other.  This would almost certainly necessitate all devices being manufactured by one company.  Microsoft is the single best positioned company at this time to provide a common software base across a wide range of consumer devices in order to the cloud to reality.  Hacking their hardware division would serve no other propose than to delay the inevitability of the cloud and to ensure that somebody else (Sony, Apple, Google) steps up to replace them.

not Happening, And The Article is gone now.

You would have thought the investors would have wanted them to pull out after the first X-box lost them billions. Then again, maybe they gave them a second chance and didn't like that the 360 lost money early on too. Fact is, their E&D division is relatively puny in terms of overall revenue and profit.

This is to be expected and unless MS see huge uptake in these areas I have no doubt some investors will continue to grumble.  Investors don't like high margin business' expanding into low margin areas generally - which is what MS is doing here.  They love it when a low margin business expands into high margin - for example when grocers like Tesco start selling lots of clothing at far higher margins than tins of beans - but going from high to low means that your average margin for the business could go down and by default that tends to trigger concerns for certain investors.

I guess they might be mollified if MS gave better guidance on the longer term importance of their efforts here - right now, if I was a neutral investor I'd see them playing second fiddle by a long shot to Apple and Nintendo with no guarantee of victory.  Or maybe the investor's in question haven't reviewed MS strategy deeply enough themselves.  Could be either way or both.

I doubt MS will pull out, personally, they've put in a lot of money/effort and are finally getting somewhere, but this a very expected view from the investor community.  And in the end, overall they're profitable and can afford what they've spent on entertainment products such as Zune and Xbox.

Its kinda dumb. Sure the argument could have been made like 3 years ago that it was time to pull the plug but at the present time the Xbox 360 actually forms a keystone of a lot of their other EDD strategy. If they pulled the plug on the Xbox 360 it would damage their other efforts in EDD and expose just how little money they actually make from the mobile market.

The bolded is the gist of your post, and it is deeply, deeply flawed: "the cloud" is shaping up despite MS' efforts or lack thereof. It's being built bottom up around coding and communication standards and ideas that have no single owner.

Apple succeeded in creating a nice walled garden by providing value in the form of design, user experience, a wide offer of digital content. On the other end of the spectrum Google's Android platform is free, open, fastly evolving, extremely adadptable to many kinds of device.

Where is the value of MS as platform providers here? Apple is already doing the "in-house" integrated, polished line of hardware/software products and is the incumbent in the high segment of the market. Google is already undercutting MS software-wise by offering a rapidly maturing free platform that ensures real provider indipendence to manufacturers. The cloud is being built over standard HTML5 over which MS has no saying, but is heavily indirectly influenced by Apple and Google - see the decline of Flash due to Apple's stance and the case of the VP8 codec opened up by Google.

MS is not the best positioned company for mobile computing. They are caught in the middle of two very different approaches and they are being left behind on both sides. Worst of all, they don't seem to have a real business statement for the future.

Going back OT, one could say that the same middle-ground conundrum applies to the eed division in the console field. Nintendo appears to be the only of the big three that is able to make a lot of money from the games hardware business. On the other side Sony, even when the playstation line bleeds money, receives added value as a hradware manufacturer when new technologies are pushed forward, plus it's already entrenched in the entertainment content providing business.

For a while, Sony has pushed the Playstation line as an alternative to living-room mediacenter PCs, subversion from which MS had to defend themselves. But now there are offers of hardware and OSs that undercut the very idea of the mediacenter: TVs with integrated browsers and free OSs are spreading.

In 5 years you won't need a console or a PC connected to your TV to consume content through the net, to connect via DLNA to your local media server, to browse Facebook and play flash-based (JS-based?) games. Your TV will do all of that, and DRM will be enforced at TV level.

Sony will build some of those devices, and allow your TV or your Playstation N to consume the same video content you paid for - and to manage everything - via a web interface. Plus they're content producers, so they'll make money from deals with other hardware providers who want to offer direct TV access to multimedia content.

The guys at Nintendo will keep doing their thing, and probably still make a lot of money.

But MS? Once again they are in the middle. They don't make as much money with games as Nintendo with their software/hardware solution, because N is better at designing and selling a user experience. They aren't that valuable as a proprietary platform provider, as they're undercut by free solutions integrated in TVs and mobile devices. They don't produce the digital content, and while they can strike deals for their distribution there will be serious competition once the consuming devices really gain critical mass.

I'm not sure where they should go from here. Xbox live is a financial success, so there seems to be money to be made by providing services. But I'm sure that if I were a MS investor I would like to know the plan, by now.

To be perfectly honest, I wouldn't mind a gaming world with just Sony and Nintendo competing. I'd actually rather it be just Nintendo vs Sega again, but I'll take what I can get.

I meant the link you have to show the XBOX SLIM. I can't find it anywhere.

It might not be called Xbox Slim, but i can guarantee that  smaller Xbox 360 or something is coming, it might not be called Xbox but its coming.