Just like what happened in the PC world?

Because hardware loses money and software makes money.  They can focus on XBox Live, providing arcade games, buying up exclusives and selling accessories and controls (eg. like mice and keyboards for PC).

Basically all the losses of the gaming division was most likely due to hardware and not software.

Will this be feasible for the next gen?

They said that they are going to try and go for something different with their next one. Digital distribution and such, this could save boatloads of money.

The licensing arrangement did not work to well for 3DO. I am not sure how well it would work for Microsoft. And if the units were not standard (like PCs), then there would be compatibility issues.

As for digital downloads, as ISPs look to turn downloads into a cash cow, that could be a problem.

Mike from Morgantown

Look how well Sega turned out...

WHAT?!?!?!?!!

no, becasue it will do a 3do

if this idea is going to work for any of the 3 console maker. it would be Nintendo, a company with the most recongizable mascots.

but Heck, why would Nintendo? it's not like they aren't making enough money with their consoles.

What could Microsoft focus on? They don't own Bungie, they don't own Gears of War, they don't really own any of the name brand mascots.

Even though it was unsuccessful in the past, does not mean it will be unsuccessful in the future. Obviously, they have to put some serious thought as to all the pros and cons, advantages and disadvantages.

Basically, whatever investment they make in the hardware department (next gen), they can instead focus on software development, including purchasing exclusives and intellectual property.

Like kingofwale said, I don't know if there is any incentive for Nintendo to do it, as they make money on both hardware and software.

Sony is a hardware company, so it kinda doesn't make sense for them as well.

MSFT is more of a software company, so it makes the most sense out of them all.

I would think US$ 6 Billion Plus in Losses can translate into $6 Billion Plus of software development, exclusive IPs, etc. That's a lot of games and content.

This thread makes it seem as if Microsoft is doing horribly bad that they should just leave and do a 'SEGA'. Microsoft is not going anywhere.

Not at all. No one is saying MSFT is doing bad at all.

However, let's look at MSFTs strengths or strategy:

Windows / Office - make software applications, let others make hardware
Servers - make software applications, let others make hardware
Cell Phones/Mobile - make software applications, let others make hardware

Games - make hardware, let others make software (games)
Zune - make hardware, let others make content - eg. music)
Search/Online - make hardware (infrastructure), let others make software (applications)

You can see the last 3 are the actual divisions that LOSE or LOST money.

In a general sense, it is much tougher in the hardware/infrastructure business, than the software business.

They may have some sort of grand strategy, but so far, it has not meshed at all.