I really like gaming, so I would like to see MS in the bussiness for a long time, right now is my favorite console, I own all three and yes it is really hard to keep up with games but if you are selective its easier.
I think they are doing OK and by the end of this generation they will have all the money they invested back, they will be able to start their 3rd generation from a fresh star with way more experience.
GUYS MORE COMPETITION BETTER GAMES... look what happens when you don't have competition, like nintendo on the casual market... terrible games.

make GOOD games that appeal to a broader audience, just as Sony and Nintendo are doing.

It would make a hell of a lot of sense for them to pack in and just make software for the next sony and nintendo machines really, a line of PC graphics cards fine tuned for windows would be an idea too.

Their target was to beat Sony and its true they are coming close but considering sony's market share is being swallowed by nintendo at an incredible rate, that is less of an achievement that they originally wanted. Battling for a distant second place isnt much when your target was to gain first palce.

First off, GT5:P is out in its strongest region,with GTA IV in a week or so, so can we stop with this "none of its anticipated titles" bullshit already. Secondly, I love how all the Sony fanboys claim the PS3 has nowhere to go but up, and the 360 has nowhere to go but down when the 360 has yet to see a substantial price drop in its biggest market. It certainly has the most diverse lineup of titles this year wheras all the PS3 can seem to get is shooters and the occasional niche game like LBP. Sure, the sales gap is at 50k i favor of the PS3, and it could easily increase, but it could just as easily swing the other way.

edit: @ nine0nine

By your logic then Sony should also quit and only make games for Nintendo systems because they also have no chance of passing the Wii. Primary goal=profitability, Secondary goal=be market share leader.   If they're making money they're not going to quit, no matter how much you may want them to.

I think what they need to do is value add, not price cut. I would buy it if the following happened:

Get rid of the elite and core.

Give the pro built in wireless and a larger hdd. (Seriously, no wifi built in, is ridiculous)

Free Live gold.

Unfortunantly Microsoft make a killing on live subscription fees. They aren't going to go away ever. Which makes me =( I'm used to online gaming being free from the days of pc gaming and from my PS3. The only reason I can see for Microsoft charging for live is that they wish to shaft the end user. It may only cost a game a year, for say 4 years. But for me thats 4 games I won't have because of it. Not acceptable.

360 is doing fine and Microsoft is making money. and they are still competing with PS3. Good games coming out so no worries.

Also, Ps3 fans should thank Microsoft for Xbox360. Seriously, if it wasn't for 360 you'll still be paying $699 for your console.

Tbh, it could have been way worse for MS. If Sony had better games (Yes, they do have a couple of good games) and with a good pace flow than MS would have been blown off the market allready and they can blame their own poor hardware for that.

Tbh, if Sony gets the flow and 2008 seems a good year GT 5 Prologue, GTA IV bundle, MGS 4 Bundle, Haze, LittleBigPlanet, Alone in the Dark (With exclusive content) and finally the announcement of two big RPG titles by the end of this year, I'd be worried if I were MS...(allthough they have GTA IV plus exclsuive content, Rock Band exclusive in Europe for a couple of months (Allthough the price will affect sales I'd say - 240 euros and offcourse Gears of War 2) Cause their major issue is not having toptitles in every genre. Face it, the games that matter on 360 after 3 years now are still shooters and racegames.

I'm not sure what they should do, but what they SOULD'VE done was drop the price of all 360 SKUs by $50 upon the launch of the ps3/wii, dropped the price by ANOTHER $50 last holiday season (which they did), and dropped the price by ANOTHER $50 two weeks before the launch of GTAIV. They'd be well past 20 million units by now if they had done this, imo.

And the RRoD certainly didn't help matters.

GT 5 Prologue was an anticipated title? No one even knew it was coming when the PS3 released... GT 5 is an anticipated title, but the Prologue never was. And how will MS boost sales significantly outside of NA? The prices in EU/Others are very, very low, lower than anything the competition can offer but it has little effect longterm it seems. Japan is a dead market for them, that's a given, so you believe that they'll pull it off just with the NA market to show for (keeping Sony on 3rd that is)? The amount of great games on the 360 is incredible and yet it fails to outsell a system with no "system selling software"  which also  has a much higher price point, and these  are to me telltale signs of the 360's potential and future. If you can't see that the 360 is performing quite badly considering all the circumstances it has going for it, then you need a reality check. It is certainly outperforming its predecessor, but that's not really a hard peak to crest if you ask me and it still remains to be seen by how much they'll improve upon the install base of the original box.

MS cannot keep their second place with only one major market, even if they lower prices, launch all the games concieveable and practically toss them at North Americans they can only pull off so many sales worldwide and this is their greatest challenge. A challenge, frankly, I don't think they'll overcome in this generation. At least their product is profitable and moves good amounts of software which nets them a decent revenue. 

@Mummelmann
The 360 is on course to sell 10m this year, due to NA price cut, GTA4 and another year of great games during the holidays. The 360 has maintained around 8m for the past 2 years, it doesnt need to outsell PS3 every week to perform well. What does it need to do to perform well? Good games every year, check. Sell at a major console level ~10m (based on PS2), check. Console industry no longer a monopoly, check.

Basically if the 360 continues what its been doing since its launch, its far from performing badly.

On the other hand, kudos to PS3 if this is their year for a HW boost.

I see MGS4 as the only problem the 360 is facing this summer and year.

Am i right?

Ninja Gaiden 2 is also released around the same time so it isn't all bad.

Once MGS4 is out then what is next for the PS3 which won't be leveled out by Gears of War 2 and Fable 2?