Personally, I see the Nintendo strategy as the smartest. If the revoultion comes in way cheaper than the PS3 and the 360 (as its rumoured to) Then I can see Nintendo gathering a huge market share as the second system in the house. In two system households a lot of people I know have an Xbox and a Gamecube, or a PS2 and a Gamecube but not a lot of people have a PS2 and an Xbox.

And I agree that Microsft is willing to dump a lot of money into the Xbox name just to keep the door open on future profits, but they won't do it forever. If the 360 loses money on every front without offering any benefit, ie, increased exposure of Microsofts software, hardware or brand, they will eventually dump it. Maybe not completely, maybe they will intergrate the Xbox name more and more into the exsisting "Media Center" Strategy, but already I think you can see that Live is becoming less about Games and more about "Entertainment" and "Community"