[gekko]

TheGame, you're on the wrong track here. The only spiral Nintendo happens to be in is going uphill. Every year Nintendo is bringing in more money. Sega on the other hand, had suffered from Sega CD, 32X, Sega Saturn, CDX, Nomad and Dreamcast. Lots of money poured into R&D, lots poured into producing these systems, at a loss, and they didn't sell well so they never made it back in software sales. Even Genesis never produced a profit for Sega. On the other hand, N64 was not the top selling system, but it made a lot of money. Gamecube is not the top selling system, but it made a lot of money. Oh, and Game Boy just happens to be the best selling system of all time, and isn't slowing down. Big money. In fact, Nintendo has never failed to profit from any of their consoles. Financially, Nintendo is looking good, they would never drop out.

Userbase has nothing to do with a company leaving an industry. If that was the case, Apple with 4% of the PC market would be long gone. In reality, they're not gone, and they're profiting. Nintendo is no different. It doesn't matter how many developers are on board, it doesn't matter how many people own your system. What matters if profits. More developers and more sales means more profits, but as long as they are not reporting losses, they wouldn't have to make any cuts, much less dropping out of an entire industry.

As for the Microsoft situation, they're plan was to initially spend money to get their foot in the door, and then earn it back. It's all the old cliche, don't count your chickens before they hatch. Xbox has yet to make a profit, and that's not what Microsoft wants. Microsoft has their foot in the door, they put up the cash in the beginning to get the best hardware, and many exclusives. That phase is over, it's time to profit. Of course, along the way came a few drawbacks for that plan, including all the price cuts which has helped increase losses to Microsoft's Home and Entertainment division, which posts the biggest losses to the company. If they keep up at this pace, they will lose nearly a billion dollars this year. Ouch.

Now we also have the big unknown. How much is it going to cost Microsoft to develop Xbox 2? If Microsoft takes another large loss producing Xbox 2, and Nintendo and Sony both find a way to make profit from their systems, we might again see soon price cuts, and perhaps another 5 years without Xbox bringing it any money.

The reality is that Microsoft has yet to make any money from Xbox, while both competitors are profiting from their systems. Xbox is continually losing money, and is hurting Microsoft financially more than any other division. Initial losses may be part of the plan, but it's getting closer and closer to the time when Microsoft is hoping to make some money, and Xbox losses are getting larger and larger. You can bet the Xbox division is under close watch, and the people in charge are feeling the heat. Microsoft has yet to show that they are capable of making money from game consoles, and considering how unpredictable the gaming industry is, it would not be wise to assume that next generation Xbox is going to be bringing in large profits.

Xbox isn't going away anytime soon, but right now, they are at a far greater risk than Nintendo or Sony.