Easy. Microsoft has dropped the price $50 in their main market (US), and have seen huge gains in Europe with their huge price drop. Microsoft wants to be profitable, and they've seen the example the PS2 has set since it's had a good bit of 1st and 3rd party support well after the next-gen version came out.

MS could keep the 360 around (ie, being manufactured) until late 2012, and wind up making a great profit off of the machine.

i hope they can it is a good games console. my first foray with ms is the 360 and i am well pleased. competition is good in this market and the 3 contentenders are giving the average gamer plenty of choice. I know we all bash each other week in week out but that is par for the course. each one has its strengths and weaknesses but overall the gaming community has come a long way imo. 

Rocketpig,

I've heard this many times, but I've never really heard specifically what happens.  Could you provide a summary? 

Oh boy, you're digging into the mental archives for this one. From what I remember, MS signed deals that essentially allowed Intel and Nvidia to retain control over the chip production and rights over the chipset. This basically put both companies in the driver's seat and MS was unable to go to other suppliers or drop prices quickly enough to compete. IIRC, MS ended up in a lawsuit with Nvidia over it.

Someone feel free to correct me if I'm wrong. It's been a long time since I read up on it and I'm too busy to look it up right now.

 No you nailed it. It was serious rookie mistake on their part. It prohibited them from reducing prices on their chipset.

Thanks!

Makes one wonder how MS got to be such a large, powerful force in the software industry if they couldn't do better than that.

Anything is possible 6 to 7 year lifespan for the 360.

What do you mean by "huge" price drop?

The 360 will last 7 years simply because it has to.

Making a console "next-gen" past the architecture of the 360 is not impossible, but it almost definately involves making the next-XBox a parallel architecture, much like the PS3.  If MS want to make a console that is signifigantly faster than the 360, they have to completely redesign it, and that costs time and money.  MS will hold onto the 360 as long as they can.

The PS3 can leap to the "next gen" very easily, and it can even still offer backwards compatibility with the current gen, whereas the 360 likely cannot (due to its need to redesign).  The Cell could be scaled to have, for example, 32 SPUs, with 512 KB or 1MB localstore each, maybe even the PPU could be turned into something more similar to the 360's triple core processor.. voila MUCH more powerful console, thanks to forward thinking.  The 360 represents the pinnacle of "old school"... or maybe I should call it "last school" design, which is one of the reasons it has so much trouble with heat.

Since the old "hardware doubles in performance every 18 months" died during the development of this generation of consoles, I would venture to say that the console lifespans from here on out are going to be a lot longer, unless some pretty major breakthroughs show up in the near future (like cheap diamond wafers, although even that has near-term limits).

MS is not putting you on when they say "7 years" for the 360, and Sony wouldn't be if they said "10 years" for the PS3.  The 360 will likely be the only console able to run 360 games for a loooong while (or ever), too, so I sure do hope they make one, down the road, that won't RRoD so much.

The 360 is selling software like crazy. What does that mean? Developers will, for the most part, continue developing software for it unless owners stop buying it. By the time the PS3 has a commanding lead (assuming we reach that point), there will likely be 35-40 million 360 consoles in circulation. If developers can sell 1M+ copies of a particular title with less than a 20 million userbase, you can be sure they will continue to develop multi-platform titles for a long time coming given that 2+ million first week sales for blockbuster titles won't be out of the question.  It really is as simple as that.