Agree with everything said.
It is increasingly difficult to sustain a business where you're making a powerful machine, selling it at a loss and having it only focus on gaming. They have to go after a wider market to recoup costs. This is also where I think Nintendo has been smart in seeing this ahead of time and decided to opt out of the power race if they do want to focus on the games experience only. That being said, they have embraced the "other" stuff with Netflix, Hulu, Nintendo TVii, etc, but have not put nearly as much focus on that stuff as Microsoft.
It's a lot easier for them to gain revenue on machines with some older hardware, so long as they have a solid output of games. The pain is less significant than it would be with a higher powered machine.
Though I do think moving forward past this generation we'll likely see a big shift in what happens in the industry. I don't know if consoles will die; but I think the scope of what defines a console might change. My thinking is we'd be moving to a hybrid device that works at home or as a portable, sort of like a laptop/tablet. Either that, or consoles will focus on the "other stuff" more so than the gaming aspect to move units.
