The way I see it MS are potentially soft exiting from the console market and progressively consolidating Xbox onto PC, but they were going to give it another shot with Xbox Two. However the people at Sony are smart and blindsided MS by switching to an iterative model. Neo coming out this year would pretty much lock in their dominance. With the 60m+ userbase the Playstation will be the lead platform for the big 3rd party games and Sony can easily get the marketing/DLC exclusive on any 3rd party game they want from here on out. MS first party is a disaster so I don't see any space for them to mount a comeback. Scorpio next year will be too late. The PS2 demolished the Xbox/GC despite both being significantly more powerful. An iterative PS would also have the power advantage at times in addition to the game library/momentum.
Yes, I'm with you. This could be their final effort to directly compete with Sony. Iterative consoles mean higher investments on all sides, so if profits don't rise equally, why should they even bother after all those years of burning cash on a plan that doesn't make sense anymore. There will still be a Xbox of some sorts, but the days of "dis gonna be gud" NPD sales threads will be over. Sony has won the console race but they never took over the living room as MS expected at the beginning of this millenium. Gaming is about content, not about plattforms. The sooner Sony, MS and Ninty realize this, the better for everyone involved. In 2020 every friggin game should be accessable on A machine of your choice.
"Consoles" should simply be degraded to a means to play x&y - they should become what a record-player once was to music. If a consumer is willing to spend 1000$ on a gaming machine, just let him do that, but he shouldn't miss out on any content.