my prediction

WW 8TH Generation
1) ps4
2) xbox 720
3) wii u

It doesn't matter what microsoft does. They will fail because of the third time is the time fail charm. Every console maker goes through. They will fail next generation. I expect them to be third.

Don't worry its normal
Ex
N64
Saturn
PS3
and next
Xbox 3

I don't know whether they can afford it or not, but the answer is simple anyway: most probably MS WON'T launch last.

I don't understand this obsession with late generation console sales. Why cut the price to compete for the worst customers? The people coming in late are hardly profitable considering they tend to buy consoles with little margins and discounted software and less of it with again lower margins.

Whilst Microsoft launched first, Sony launched with a massive advantage in momentum and mindshare. Noone is going to go into this generation with expectations of FF, MGS, GTA exclusivity and therefore buy a PS4 by default. Microsoft and Sony will come into the next generation relative equals which is a significant change over the current generation. The big fight will be over who can get the upper hand if the first couple of years and snag the early momentum and best customers.

One good advantage Microsoft has now is that people won't expect them to cut the price or release hardware revisions quickly. This means your launch hardware isn't going to be quickly obsoleted and you aren't likely to feel buyers remorse in the 2nd year from a substantial price cut. This means that people may be more willing to take a leap of faith in the first 6-12 months.

yeah just like Spain must can't win Euro 2012 and MS always lose his 3rd gen product(look at Windows 3.0)