No, see, when 360 launched, the XBox org was a "strategic bet" (Microsoft dumps tons of money into strategic bets - not all of them pan out). Now it's a profit center. It would be infeasible to reduce year over year profit growth. So selling hugely underpriced hardware now is going to be a tough sell.
But I wasn't referring to ancillary revenue. I was referring to direct hardware profits. The 360 launched with a roadmap to profitability using process shrinks and volume discounts. It's successor won't be so lucky. Process shrinks are getting harder to execute and energy efficiency is not linear with process size (much more leakage at smaller sizes).
Also, the customer focus has changed. People spend more time on 360 now consuming media than playing games. Sure, games are good, but what keeps that ancillary revenue coming in now is evenly split. You don't need a monster, power hungry, money losing superbox to provide streaming movies, and the games will adapt to the resources they have. A modest increase could be workable. Quadruple the memory, and even with no changes in CPU and GPU, the games would be significantly better.
If the rumors have any truth in them, both sides are aiming a lot lower this next generation that the previous.
So I was not saying MS is not currently making money on it's games business, I was just pointing out that your original statement overlooked the fact that the company may not be as willing to dump money into the ecosystem as it was last time around.
