Well, you forget that sometimes people don't have money :P I don't know about everyone here, but for us, money is tight atm and getting another console is almost unthinkable.  Plus, wii has lots of games that traditional gamers love, such as mario galaxy, zelda, metriod, etc.

Anyways, on topic, Microsoft will most likely not leave even if they lost money on this generation. Remember, Microsoft's main goal is to cause sony to have to give up its plan of a living room multimedia hub. Profit is secondary. Why do you think MS is moneyhatting all the JRPGs, ninja gaiden etc? We all know that 360 is dead in Japan and WILL stay that way. MS knows it, sony knows it, Japan knows it, everyone but the most die hard fanboy knows it. So why get the exclusives? To keep sony from getting them and growing in Japan. Thats the real answer.

So, MS will not leave the console market unless sony gives up or they make such losses that it would outwiegh the future profit loss of letting sony have a multimedia hub.

Even if they got creamed again this generation, I don't think they plan to exit. The console may eventually morph into another piece of home electronics that is meant to handle the age of full distribution of digital content, from music and movies to games and more.

Microsoft sees the living room becoming the hub for this kind of content, as opposed to the traditional pc setup, so there's no way they'll give up since they plan to establish themselves as the forerunner for digitally distributed content.

I'm rooting for MS this generation. I like my 360 and what they've done... but I'm also rooting for Sony in a way. The living room market is going to need strong competitors in the coming years to make sure we, the consumer, don't get fucked over, so if MS has to fight tooth and nail the next 5-10 years, I'm more than ok with that.

 QFT

Having MS enter the race creates even more competition and allows far more choices concerning prices and games. Thats why people should never wish for another console franchise to just die (as long as they are still delivering quality hardware and software). Should one of the 3 corporations leave there would be less competition and then possibly higher prices and less for the consumers to choose from. In other words, fanboys = bad for economics

I'm not so sure M$ is good for the gaming industry but their grand master plan seems to be working so far.

I thought they were already turning a profit?

Doesn't make sense... No matter what happens, they've enhanced their Xbox brandname (even with the RROD episode), and it would be financially stupid to not use it again.

That would only be true if the losses were really massive, but right now they can control their losses since they don't need to be aggressive in terms of pricing. They've been making profit in every quarter for quite a while. Even if they have a net loss at the end, it will still be worth it to do a better try next time.

They'll stay in as long as Sony is in until Entertainment Computers are the next big thing

They will not exit. MS is still too big. If MS really starts to lose revenue across all sectors then maybe, but that day is far far away... in another galaxy.

They won't leave, a $400 piece of hardware that runs linux in every living room is too dangerous to their core business, thus, they will do what they can to stop that from happening.