Software sales are always important for every platform, consoles, handhelds, pc's.  But when the hardware is sold at a loss, as in the case of PS3 and 360, software sales are all they have.  They simply can't afford piracy, so they go out of their way to stop it.  This isn't so when hardware is sold at a profit.

Consider the PC, where hardware is sold at a profit, or even Nintendo.  Piracy is rampant, but profits are still being made.   Hell, look at the iPod.   If the 120GB model was sold at a loss for $50, I assure you Apple would have many protection features to force the majority of users to buy every single song off of iTunes.  But they don't, the iPod is sold at a profit, and apple doesn't seem to mind that most people pirate music.

If the Razor & Blade strategy is at its end for consoles, which it looks to be considering the negative profits for MS and Sony, could software developers face a future where console makers turn a blind eye to piracy?

I don't think so, in the PC example hardware manufacturers have no stake and possibly stand to benefit at least in the short term from piracy which is not the case with consoles.

Umm..Nintendo recently launched a huge lawsuit against the R4. So Nintendo takes piracy very seriously.

Who would make the games then? You could say goodbye to competent third parties. Nintendo makes profit on both hardware and software. I doubt there would be much motivation to make great software if people were just going to steal it. There would still be good software, but the AAA games would likely disappear. Ofcourse that's the worst case scenario wherein everybody pirates everything. And from what we've seen in PCs that won't happen, but it's still scary to think about it.

Apple makes barely any - if any at all - money off of music.  The deals with the record labels are terrible - basically they created the store to make it easy for iPod customers to get music - so that more people would buy (and upgrade) their iPods.  Their model is most definietly making money off the hardware.

they wont turn a blind eye because it would be a significant amount of additional profits