Microsoft is just a baby compared to Sony and Nintey so give it a little bit more time because its still too early to judge its ups and downs.

It's pretty clear that Microsoft would have been on top right now if it weren't for Nintendo's disruption. If anything (and I'm not saying this is likely), we have more chance of losing Sony than Microsoft, as Sony's company as a whole has been suffering pretty badly. Microsoft is making billions on top of billions from PCs and other Windows-based devices, so if they need to eat a few billion to keep their console/set-top box in the race while it builds its brand name, that's nothing for them. Actually, given how adaptable Microsoft has been when it comes to successfully making winning strategies their own (see how they saw what Sony did with PS2 and paplied it to Xbox 360, and what they are now doing with Natal after Wii), I could see them winning the next generation if Nintendo doesn't pull another fast one.

@Carl2291:
Maybe MS doesn't "think different" enough to achieve what Nintendo did with Wii and DS, but it's now competent enough to avoid utter failures, even if only by the brute force of its huge cash, MS can fare decently from now on. What they are doing with Win 7 launch and awckward XP licensing on netbooks, OTOH, is a lot more worrying and increasingly looking desperate...

MS isn't going to drop out unless their next system or system thereafter bombs in a way they don't get any money or market share. MS has very, very, very, very, very, very, very, very, very deep pockets. They won't back out.

It seems individuals underestimate Microsoft's resources.

I do not understand why this concept is so hard for individuals to grasp.

And I doubt the next X-box will bomb. I am sure Microsoft has taken notes from this generation....

It should have learned from Sony not to overestimate brand and underestimate price perception...

It should have learned from Nintendo to secure and maintain strong third party support from the start of the generation, and to tap the causal gamer market..

It should have learned from itself not to release premature hardware and the appeal and value of software functionality

Hopefully, all three console makers have taken notes and deliver an amazing experience next generation

MS only joined gaming for a single reason, and that was to stop Sony from gaing so much marketshare and getting marketshare from their PC business. That was back when Sony said the PS2 was gonna be like a home console with Aim, Internet, etc. needless to say, they did their job.

I guess now they are seeing that their gaming division finally became profitable just as they passed Sony, so they are keeping it going.

For some reason i'm having trouble wording this right now, kinda tired...

You should wait till this gen is over....

Well they are currently pulling in some healthy profits, so the only way they would pull out now is if they stopped making such healthy profits. Once they get their Live userbase up to 30-40M by the end of next year towards the start of 2011 they should really be pulling in enough profits to make a dent in their overall balance sheet.

This is only Microsoft's 2nd gen, there doing a lot better than the ps3 and with great software sale. This thread is an EPIC FAIL.

It doesn't matter what their losses are capped at, they could have sunk a 100 billion dollars into the xbox brand, but if it is generating a profit now, and they believe it will continue to generate profits into the future they will stick with it. 

http://en.wikipedia.org/wiki/Sunk_costs