Microsoft could go a different approach next gen. They could become strictly an OS company and license their Xbox OS to hardware manufacturers or put their system on a SOC and sell the SOC to be integrated. We could be seeing multimedia boxes made by Samsung, LG, Panasonic, Toshiba, HP, Dell, Asus, HTC, Nokia. Maybe even TVs with Xbox built in.

Impossible to say right now.

pretty much the idea if they can't win it as a hardware company....

Why would you say they would leave? Because the XBO could be a failure? It's not profitable?

I doubt MS would leave for those reasons. However, I do think the XBO might be their last console, though, in a traditional sense. Not because of sales.
Also, the 360 pulled MS out of the hole made by the original XB. So it was profitable, even though it didn't win last generation.

Thank you.

Geeks like us, who debate on fourms care about total sales.
Companies, investors and everyone in charge care about profits and MS has the 2nd place locked since 2009 in that regard.

I would add that the fact that Microsoft hasn't made an official price drop is indiciative of the power the have in the industry right now.  Last generation, Sony had all the power and they controlled the marketshare by lowering their price continually.  Where as, this generation, at least in the US and UK, Microsoft despite dominance in the marketplace for the past few years, hasn't lowered their price. 

Consequently, this hasn't hurt Sony but rather helped them.  If there is any sign that Microsoft wants competition in the console space, it's the fact that they haven't attempted to "kill-off" Sony like Sony tried to do to Microsoft last gen. 

I think Microsoft is extremely happy where this generation is ending up.  Regardless of whether they're #1, #2, or #3.  The marketshare, as you point out is much more important and the fact that it is fairly even makes it a good generation for all players.  So, I don't think Microsoft will see this as a bad generation, I think it'll look at where it was in 2001, 2005, and today and say we've made a sucessful business of this. 

Looking forward, I believe Microsoft is looking at Europe and thinking they have a lot of potential for success there.  I would even go so far as to say I think once this generation gets started, you'll see Microsoft focusing almost exclusively on the European market for expansion.   It's a huge market that Microsoft can't and won't pass up. 

I think Japan will be the last market Microsoft even considers worrying about.  If and when China opens up, I believe Microsoft will heavily invest in content, services, and games there.  The market in China is so substantially greater than the market in Japan that putting any effort into Japan over China would be a fools game and an opportunity for Sony or Nintendo to step in.  And then there is India.  India will be the next emerging market.  The problem with India is the fact that the infrastucture isn't nearly as good as in China, the population is far poorer than in China, and India is still a hotbed for violence. 

I don't see Microsoft dropping out of the console market.  They've reorganized the company around hardware, altering their software only focus.  They didn't do this because they haven't been successful.  Instead, because of their success with the Xbox they're refocusing the company.   

Microsoft is kind of only in this to send a message to Sony. If Sony beats them consecutively they will leave. Look at the Zune with Apple. They couldn't beat get close to their sales so they left. Microsoft doesn't deal in competition they cant dominate or be competitive with. The money Microsoft makes off of the Xbox is really nothing compared to Windows. If Windows goes bad, they will blame the Xbox for its problems or any side project Microsoft is doing. 

Sony & Nintendo are now in the gaming industry life or death and Microsoft isnt.

The Zune was profitable. Its not about profitable. Its about domination, and if they cannot accomplish it onto the next project. They said back in 2011 Zune branding wouldnt disappear...and it did. Its Xbox music now.

I do think that XB1 will be MS's last console.

But not because of poor sales, or anything like that. I think it'll be their last console because of convergence - that is, consoles are already very similar to PC, and software platforms on PC are strengthening. I expect that MS's next "console" will actually be Xbox Live on the PC, perhaps formulated into an "Xbox Live Windows" - an OS dedicated to gaming.

Hardware has never really been MS's forte. There's a reason why there's no such thing as the "Microsoft PC" - no first-party Windows hardware. MS only got into the gaming hardware business to fight off Sony, who were stealing all of MS's PC gaming. This new generation, PC is going to be running alongside XB1 most of the way, I think, with games made for XB1 pretty much already being ready to put on Windows without much further modification. And with that, MS's motivation to be in the gaming hardware space fades - PC gaming is set to become pretty much the same as "traditional" console gaming (that is, not counting the Wii U, which is taking a different tack).


Oh, and there's no way that the 360 will overtake the Wii. At this point, it's not even obvious that the PS3 will (for all the pointing at PS2 that people do, the fact is that the PS3 is no PS2 in terms of sales, and there's no particular reason to expect that, just because it's a Sony system, it'll therefore follow in the PS2's footsteps in terms of sales; the PSP certainly hasn't - the PS2 sold over 13 million units in 2007-2008 financial year, the PSP barely broke 4 million in 2012).

Wii is first, the generation is over