Because they have tremendous R&D costs to make up for, employees to pay, server farms to power, development costs to eat, vastly lower than anticipated hardware sales which is important because they have a loss leading strategy, software is not selling like they had hoped (this is the big key to loss leading, you need massive software sales to make up for the losses on each console) they've had to make nunerous price cuts repeatedly to try and spur sales which didn't work, but definitely ate into the bottom line, uhm... I know I'm missing quite a bit more. The mere fact that they started hiding Xbox numbers this gen and only this gen should be a big red flag.

Did you know that they thought this gen had the potential to sell over 1 billion consoles? Did you know that they spent over 100 million in R&D for the controller alone? Did you know that they thought they would break even on MineCraft the same year they purchased the rights and studio (sold for 2.5 billion btw)

The point is they are extremely out of touch with their consumers and blinded by greed. They have no business in the gaming space and quite frankly with the amount of money they've invested, they're just bad at it. 

I guesss they just accept their position as number 2 in the industry and try to make money. This is a battle they couldn't win from the beginning. There's room for more than just the winner. McDonald's and Burger King can both make money and coexist. So can Playstation and Xbox.

Or give your old ps4 in trade in, similar to when the ps3 and xb360 slim launched.  A lot of people wanted trade in their old hardware for the slims.

Microsoft is actually waiting to see how PS4 VR is going to fail and consume a good chunk of their money. Plus, there's already negative press about the upgrade in PS4 since Sony is trying to do the phone business of doing minimal ugrades to keep the price up. We'll see how that works

They'll just accept that Xbox One is their fastest selling console and try to keep that momentum introducing a more powerful model, just as Phil teased at Xbox Spring Showcase. Microsoft has been very clear they view Xbox as a platform, not defined by hardware or the specs of a singular console. So yes, Xbox games would be scalable across different Xbox SKU's as a game would be scalable on PC regardless of hardware configuration.

Whether voices on the internet agree or not, if 2 competitors are refreshing their hardware, it becomes a necessity to keep your platform relevant and in the hype conversation.

These things start to germinate very early, and there is a roadmap in place...so no, its not something Sony or MS just pulled out of their rears this year. Working with AMD they knew what the manufacturing nodes meant for transistor count and cost, and that launching at 28nm meant they couldn't pack too much power initially for a high perf green device. They also were not oblivious that launching 1080p/30 machines was not innovative in a market shipping 4K display panels. They simply played the cards they were dealt with to launch in 2013.

I'm expecting the new consoles to use 20nm, as 16nm is pipedream to cram the custom architecture they use. AMD/Nvidia will be at 16m this year on the GPU alone, and the consoles need 8core APU's with the custom memory configuration and gates that were architectured for them.

Not launching something like PS4.5, this will be a win for the Xbone users.

Why is the streaming of a games catalog not counted ?  This arguement is made constantly and usually in the context you put it with BC.  

I even see people go so far as to argue people want to own their content and renting is on the decline.  

People can buy DVD's cheap can't they?  Yet we have multiple successful streaming services.  There is definitely a market for it.  

They have the same "loss leading" strategy as Sony does in the gaming space. Didn't the PS3 lose all the profits Sony made from the PS2, the highest selling console ever?

The only other relevant thing you said was about the controller R&D, and who cares? So they spent money trying new things with their controller. If they were so "blinded by greed" I doubt they'd burn over $100,000,000 trying to improve an already pretty great controller. The stuff about 1 billion consoles and breaking even on Minecraft is just you failing at understanding what you were reading.

Actually you are very far from wrong.

The biggest problem with new generations is the cost of R&D, the cost of developing new SDK's, new development processes. The reason why the 4.5 is a good idea (and the reason why they went with a console that is easily upgradable in this way), is that it costs a hell of a lot less than making a new full blown console. If the specs are to be believed then its a step approach which will cost very little for sony. While they are winning, they can release a new console, which will sell for more and they'll bring in some people who already purchased the PS4.

So actually the risk is just releasing a new console every 6-8 years, that costs a lot of money, takes a lot of dev time, costs alot for developers and is a massive pain.

Remember it wasnt that long ago Phil Spencer was saying that they were looking at upgradable hardware, dont let phils recent comments of "we'd never do this" fool you. This is the way its going to go in the future, this 6-8 years out of touch hardware is no longer a good idea for many reasons. MS's big problem is they went with quite a poor memory structure, so longer term they'll have to change the hardware structure to handle better specs imho.

XBox is doing fine.Not just because its not winning against the PS4 that it is doomed.They will need to do something if they stop getting profits, or if the profits are too low