So right after the previous news about the PS3 breaking even, we see that the Xbox is now on the "downside of its life cycle." And this is after the analysis that it's a better performer than the PS3 (though I know this is a controversial opinion).
So what exactly determines the "life cycle" of a console? I'd be guessing that it's pretty simple: software capabilities always seem to be out-pacing hardware, and Moore's Law applies just as much to consoles as to PC's. So the goal of these companies is to return the initial investment, and make enough to develop the next generation, all the while
What I surmised from the article was that Microsoft is trying to use the kinect system (as I wrote about earlier) as a proxy to "extend the life" of the 360, especially to appeal to casual and social gamers (virtual pets, parties, fitness games).
According to DFC (a game industry researcher), this is going to be difficult for Microsoft, as they're not an "entertainment company" by nature. This confused me though, because it HAS gotten this far.
For the "Big 3" as a whole, the target is to "push them through" for a couple more years to and make up on the investment for their initial development (and as we know, the PS3 has only just started breaking even), and to mwork kon the next big thing. So I'd predict that the Xbox (as well as the Wii and PS3) have maybe... 3 years left at the most?
Again, all the console talk makes me think that it would definitely be better to be a 3rd party developer.