Now Microsoft (MSFT) introduced the Xbox in November 2001 and deliberately brought out their next machine, the 360, just four years later, in November 2005, so as to be first to market with the next generation. They kept the two models as a range for just one year, killing off the original Xbox in November 2006 when it was just five years old.

To me it looks like they killed off the original Xbox half way through its life. They could have re-engineered it to make it far cheaper to manufacture (just as Sony did with the PSOne) and kept on selling it for another five years as part of a two product line. They would have sold tens of millions of additional units if the continuing success of the Playstation 2 is anything to go by.

Now imagine the benefits if they has kept the original Xbox alive. It would have given them market presence in the massive developing countries of China and India were lower incomes favor a cheaper machine. It would have brought millions of new people to Xbox live, helping to lock them into buying future generations of Microsoft consoles. And it would have made enormous profits from the continuing sale of the Xbox game back catalogue.